Plenty of uncertainty. That’s what the U.S. office sector still faces, according to the latest research from Colliers.
In its first quarter 2025 national office report, Colliers said that the country’s office sector started 2025 with positive momentum following a strong fourth quarter of 2024. But by the end of the year’s first quarter? Economic uncertainty had scuttled much of that momentum.
According to Colliers, the majority of U.S. office markets remain in favor of tenants, not landlords. But in a hint of good news, almost three-quarters of U.S. office markets are now forecasting flat or positive absorption levels.
Landlord concessions seem to have peaked in most markets, too. Colliers reported that landlord concessions are projected to remain at current levels in 63.2% of U.S. markets. That’s an improvement a year ago, where concessions were only expected to remain at current levels in 53.5% of U.S. office markets.
Challenges remain, though. Colliers pointed to the economic uncertainty surrounding tariffs, an uncertainty that is causing many companies to delay their office leasing decisions. Buildings owners are also reconsidering capital expenditures for property improvements because of fluctuating material costs and availability.
And in little surprise, Colliers said that many tenants continue to seek space in high-quality, Class-A office properties with top-end amenities. That has been a trend since the pandemic and is showing no signs of lessening.
How are the numbers? Colliers reported that the U.S. office vacancy rate stood at 18.1% as of the end of the first quarter. Year-to-date, this sector has seen 1.7 million square feet of net absorption. That absorption number represented a significant improvement from the first quarter a year ago, a quarter that saw negative 19.9 million square feet of office absorption.
Colliers reported, too, that 33.5 million square feet of office space was under construction across the country as of the end of the first quarter. The overall Class-A asking lease rate for U.S. office space averaged $37.12 a square foot. That last figure was up, too, from the first quarter of 2024, when the average asking lease rate stood at an average of $36.73 a square foot.
