The U.S. office sector is showing signs of recovery as 2026 begins after years of turbulence from the pandemic, evolving tenant demand and investor recalibration, according to Marcus & Millichap's February 2026 Office Market Outlook.
The sector posted its seventh consecutive quarter of positive net absorption in Q4 2025, with nearly 95 million square feet of office space leased over the year. The national office vacancy rate fell to 16.3% by late 2025, down from a peak of 17.2% in the first half of 2024.
Marcus & Millichap expects vacancy to continue declining to 15.9% by the end of 2026, signaling sustained improvement in occupancy levels. Return-to-office initiatives have played a key role, with sector attendance climbing to roughly 70% of pre-pandemic levels last year. The firm projects office occupancy to increase in 36 of 50 major U.S. markets this year.
Deal flow in the office sector has strengthened as investors adjust to new pricing realities. Although transaction velocity remains about 6% below the 2014-2019 average, sales activity rose 21% year-over-year in 2025. This uptick was driven largely by the repricing of office assets, which declined by an average of 32% from 2021 to 2025.
Private investors dominated acquisitions, accounting for 54% of all transactions, while institutional buyers increased their share to 23% from 18% the prior year. Average office cap rates expanded to 7.5%, though top-performing assets continue to trade near 6%, the report said.
Leading office markets are benefiting from low vacancy, strong office attendance and limited supply pressure. South Florida markets, including Fort Lauderdale, Miami-Dade and West Palm Beach, rank highly, supported by some of the country's highest occupancy and attendance rates. Raleigh stands out for its limited new supply, a projected 30-basis-point decline in vacancy, and expected asking rent growth of 1.1% in 2026.
Tampa-St. Petersburg is expected to see vacancy fall to 11.1% with asking rents rising 3.3%, building on 2.2% and 3% gains in 2025 and 2024. New York City's momentum is expected to continue, with an additional 70 basis-point decline in vacancy and forecast rent growth of 2.8%.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.