For years, the U.S. office market has been shrouded in uncertainty, but a wave of new data suggests the tide is finally beginning to turn—at least in some corners of the country. While many cities remain mired in high vacancies and tepid rents, places like San Francisco are experiencing notable growth in office activity and sales, hinting at a patchwork recovery that’s reshaping the commercial real estate landscape.
San Francisco led the nation in office visitation growth this September, with a 19% year-over-year increase compared to a 13% national average, according to recent reports. Crexi found that office sale prices climbed 2.09% month over month in October, up 13.38% year over year.
The office sector was among the top drivers for the commercial real estate transaction rebound in the third quarter, as noted by Altus Group, and this momentum wasn’t confined to major metros—smaller cities also started to show signs of life after a challenging stretch.
The outlook is improving, with capital markets loosening and demand returning to most regions, CBRE reports. Even lower-tier office buildings—hit hardest since interest rates rose—may soon get relief as income prospects brighten.
Still, much of the office market remains deeply troubled. National vacancy rates reached a historic 14.1%, according to CoStar. The Wall Street Journal cited CoStar data showing that five of the 12 largest office markets are at their highest vacancy rates in 25 years, with several others barely trailing.
Unlike past downturns, recovery has lagged since the pandemic, when the shift to remote and hybrid work led companies to shrink their real estate footprints. This has widened the gap between resilient cities and those left behind.
Chicago’s commercial property market offers a stark example. The Cook County Treasurer’s Office reported a “drastic” drop in property values for office, retail, hotel, and restaurant properties in the Loop, resulting in a $129 million tax revenue shortfall in 2024 that shifted the burden to homeowners.
Boston faces similar challenges: a study by the Boston Policy Institute and the Center for State Policy Analysis warned that plunging office values threaten city budgets and could ripple far beyond the region, with urban cores across America watching closely.
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