Yardi Matrix's national office report for March 2026 presents a mixed picture, with some sectors beginning to emerge from the slump of the post-Covid period while others still struggle.
In the life sciences, investor interest has begun to show signs of life after the Trump administration's 2025 budget cuts to the National Institutes of Health helped drive down investment in the field.
Even though Congress rejected these cuts and increased the NIH's 2026 budget, new policies of the Office of Management and Budget caused grant approvals to plummet and forced competition for available funds.
Annual deliveries of life science space peaked at 13.9 million square feet in 2024, but the uncertainty created by the administration's policies helped plunge deliveries to 11.2 million in 2025. The decline is expected to continue this year.
The number of transactions in life sciences properties rose from 14 at an average price of $426 per square foot and a total sales value of $600 million in 2024 to 37 deals at an average of just $324 per square foot for a total of $1.7 billion last year
The big three life science hubs continue to receive the greatest interest. In San Francisco, 3.3 million square feet were delivered, in Boston, 2.3 million and in San Diego, 1.5 million.
However, Yardi said the significant drop in construction starts over the past two years suggests that the current supply glut will be gradually absorbed.
"We expect life sciences to be a strong subset of the office market for the foreseeable future," it commented.
The report also highlighted the toll the weak labor market has inflicted on the broader office-using job sector. In February this year, Nashville was one of only seven metros with positive year-over-year office employment growth.
Nationally, the information sector lost 11,000 positions and the professional and business services sector shed 5,000. However, the financial sector gained 10,000. Year-over-year, office-using jobs were slashed by 0.5% to 185,000 nationwide. Total non-farm employment rose 0.1%.
Nationwide, new office starts fell from their 2022 peak of 15.4 million square feet to 2.4 million in 2025.
The broader office market saw the national average full-service equivalent listing rate climb 24 cents to $32.79 per square foot from January to February 2026, though it was down 1.9% year-over-year.
The national vacancy rate fell to 27.6%, down 200 bps from the year before. Only eight of the top metros still had vacancies above 20%. In the case of Denver, the supply pipeline has fallen every year since 2021 and vacancy over the 12 months from February 2025 to 2026 fell by 520 bps – aided by the removal of several office buildings. In one case, a 13-story, 140,000-square-foot structure is to be removed to make way for 660 multifamily rental units.
So far in 2026, 2.3 million square feet of office space have been completed in the country as a whole and 28.2 million more are under construction, accounting for 0.4% of the stock. The pipeline has leveled off, with just 13 million square feet started.
In 2025, only three U.S. markets had office starts exceeding one million square feet. Manhattan ranked first with 2.3 million square feet or 16% of all starts. In 2026, it remains the leader in construction, followed by West Palm Beach (1.4 million) and Boston (1.2 million).
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