While many U.S. office markets continue to navigate lingering post-pandemic attendance trends, strong fundamentals are sustaining the sector’s overall performance, according to a CommercialCafe analysis. Even as headline vacancy rates and listing prices may suggest ongoing challenges, leasing activity, sales volume, and selective rent growth indicate resilience across key markets.
National office supply remained modest entering November, with just over 33 million square feet under construction. This represents a slight improvement from previous months in what has historically been a slow construction-start pipeline. Yet, the prolonged realignment of the office sector suggests new developments are likely to remain limited in the near term, according to the analysis. Boston, Manhattan, and Dallas were the most active pipelines last month, each surpassing 2 million square feet of new office space under construction. Los Angeles followed with nearly 2 million square feet, and San Diego reported roughly 1.4 million square feet.
Overall, national office vacancy declined slightly year-over-year to 18.6% in October, while the national average listing rate remained stable at $32.81 per square foot. Manhattan and Miami recorded the lowest vacancy rates, averaging about 13%, while most Western U.S. markets were above the national average. Seattle led the region with the highest vacancy rate at 27.4%, followed by San Francisco at 26% and Denver and the broader Bay Area at nearly 23%. Los Angeles and Phoenix were slightly lower, at 14.6% and 17.4%, respectively.
High-quality, Class A, and trophy office space continues to benefit from the “flight-to-quality” trend, with demand concentrated in newer, well-located buildings, the report said. San Francisco remained the priciest Western market with asking rents exceeding $65 per square foot, while the broader Bay Area averaged nearly $52 per square foot. By comparison, many Midwestern and Southern markets offered more affordable office rates, highlighting regional disparities.
Year-to-date office sales through October totaled nearly $43 billion, with transactions averaging $191 per square foot. Although sales activity remains below the peaks of prior booms, both prices and quarterly totals have steadily recovered since the lows of Q1 2024, said CommercialCafe. Manhattan led the nation in dollar volume at $6.4 billion, followed by the Bay Area at $4.4 billion, and Washington, D.C., at $3.6 billion. Denver, which saw office transactions peak at $300 per square foot in 2022, has averaged $125 per square foot for 2025, reflecting a broader cooling of previously overheated markets.
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