Momentum is gradually rebuilding in the U.S. office sector as the market pushes through a prolonged post-pandemic recovery. According to Marcus & Millichap’s latest analysis, office attendance continues to trend upward, even as hybrid schedules remain the dominant workplace format.
Over the past six quarters, the office sector has absorbed more than 127 million square feet of space, reducing national vacancy from a high of 17.2% in early 2024 to 16.4% at the end of the third quarter of 2025.
This demand is not uniform. Tenants are showing clear preferences for newer, smaller suburban offices, as well as high-amenity Class A buildings in major markets such as New York City, Miami-Dade, Washington, D.C., Atlanta and Dallas. Markets boasting the lowest vacancy rates include Riverside–San Bernardino, Charleston, Cleveland, Tampa and a group of smaller outperformers such as Knoxville, Madison and Reno.
Office utilization patterns reflect this rebuilding trend. Utilization collapsed by more than 90% during the pandemic but rebounded to roughly 50% of 2019 levels by early 2023. By October 2025, utilization reached about 70%, with New York and Miami closest to full recovery. Denver, Boston, Chicago and San Francisco continue to lag, though the latter city has posted some of the strongest year-over-year improvements despite its elevated vacancy, Marcus & Millichap’s said.
Meanwhile, a shifting labor environment may further accelerate the return-to-office trend.
“Many companies, especially in the financial services and tech sectors, have been trying to bring more employees back into the office over the last few years, but the tight labor market has restrained these efforts,” said John Chang, chief intelligence and analytics officer at Marcus & Millichap.
“Companies have been reluctant to mandate return-to-office policies because of the shortage of workers. If job creation slows in 2026 as expected and the unemployment rate nudges higher, employees may begin to work from the office more frequently, in turn bolstering office-based demand.”
On the supply side, new construction is tightening rapidly. Office development is expected to fall to a 25-year low in 2026, a shift that, combined with continued absorption, is projected to push national vacancy down to 15.9% by year-end.
The investment climate remains complex but active. Elevated cap rates and unique investment opportunities have attracted a range of investors. Owner-users, who historically make up 5% to 8% of the buyer pool, now account for about 13% of acquisition activity, while private investors, who historically comprise about 30% of buyers, now make up closer to half of acquisitions.
The average cap rate has helped investors pursue opportunities, rising 90 basis points since 2022 to an average of 7.6% last year.
“Office properties are trading with an enormous price and cap rate range depending on the specific asset, its location, its tenant base, the in-place leases, the property's performance outlook, and a variety of other variables,” Chang said.
“That said, there are some very unique investment opportunities for investors who understand the nuances of office assets and who have the financial resources to maximize the property's potential.”
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