The U.S. office market is finally showing signs of stability, according to the latest research from Colliers.
In its first quarter 2026 U.S. Office Report, Colliers says that office fundamentals across the country continued to improve during the first quarter of the year, even as high-quality office properties continue to outperform older buildings.
According to Colliers, the U.S. office sector entered 2026 on what it calls firmer footing after several years of disruption fueled by hybrid work, elevated vacancy rates and uncertainty in the capital markets. The report points to growing leasing activity, declining vacancy and positive absorption as evidence that the office market’s recovery is gaining traction.
National net absorption reached 6.2 million square feet during the first quarter, marking the seventh consecutive quarter of positive absorption, Colliers said. Even more encouraging for landlords? Demand exceeded new supply for the third straight quarter.
That is a dramatic turnaround from just two years ago, when the office market was still struggling through widespread downsizing and large blocks of empty space.
Colliers reported that trailing 12-month net absorption totaled 23.2 million square feet nationally, compared to negative 64.6 million square feet in early 2024.
But while the office market is improving overall, the recovery remains uneven.
The strongest performance continues to be concentrated in gateway and innovation-driven markets, particularly those attracting highly educated workers and technology companies. Manhattan and San Francisco led the nation in office demand during the first quarter, according to the report, with Manhattan posting nearly 2 million square feet of positive absorption during the quarter and San Francisco adding nearly 1.4 million square feet.
Dallas-Fort Worth, Boston and Silicon Valley also ranked among the nation’s strongest office markets for trailing 12-month absorption, according to Colliers.
Colliers reported that Midwest markets continued to lag behind the national recovery. According to the report, the Midwest region recorded negative absorption of 156,476 square feet during the first quarter while the office vacancy rate in the region increased 40 basis points year-over-year to 18.5%.
Chicago remained one of the Midwest’s more challenged office markets. The city posted negative absorption of nearly 693,000 square feet during the quarter while vacancy climbed to 25.5%. Detroit also struggled, recording negative absorption of nearly 700,000 square feet.
Not every Midwest market struggled, though. Kansas City posted more than 521,000 square feet of positive absorption during the quarter, while Columbus added nearly 282,000 square feet.
One of the biggest themes running through the Colliers report is the continued flight to quality that the U.S. office market is seeing.
Tenants are increasingly leasing space in newer Class-A office buildings with plenty of amenities, modern designs and prime, walkable locations. Older Class-B and -C properties continue to struggle to attract tenants and fill their empty spaces.
Colliers reported that Class-A office properties accounted for 7.7 million square feet of positive absorption during the quarter. At the same time, the national Class-A vacancy rate fell by 10 basis points to 21.1%, while vacancy in Class-B space remained unchanged.
Landlords are responding by becoming more creative in how they market and reposition their buildings.
According to the report, some owners are converting former life sciences space back into traditional office use, while others are targeting medical office tenants for lower floors that previously would not have been marketed to healthcare users.
Another key finding in Colliers’ report? U.S. office inventory itself is shrinking. Colliers said that outdated office buildings are increasingly being removed from the market through conversions to residential, hotel, mixed-use and life sciences projects. Those conversions are helping reduce vacancy rates in many downtown markets by eliminating outdated space that no longer brings in tenants.
At the same time, the pace of new office development remains sluggish. The national office construction pipeline totaled just 23.6 million square feet in the first quarter, down sharply from the 158 million-square-foot peak recorded at the end of 2019, according to Colliers’ research.
Average asking rents also continued to rise across the country. Colliers reported that the average office asking rent increased 2.4% in the first quarter on a year-over-year basis to $38.08 a square foot.
