Office tenants are back on the move. In the first quarter of 2026, occupiers signed new leases totaling about 120 million square feet nationwide—a 25% jump from a year earlier and the first time quarterly volume has surpassed the pre-2020 average, according to CoStar data.
Yet beneath that headline number lies a market defined less by sweeping corporate expansions and more by a steady churn of smaller deals reshaping the office landscape.
Unlike other data sources that track only select metros or property types, CoStar aims to capture the broadest possible view of U.S. office leasing activity.
"We're trying to capture the commercial real estate universe, so we are tracking all the markets we can and all the buildings we can," Phil Mobley, national director of Office Analytics at CoStar Group, tells GlobeSt.com.
What CoStar's numbers show is a fundamental shift in leasing behavior.
"Smaller deals have been the key feature of the leasing market for about 2 and a half years now … the general size of a lease deal being about 15% smaller than before 2020," Mobley says. "What has really driven the recovery of leasing volume has been the full recovery of the number of lease deals being done."
That uptick matters. In 2025, there were 5% more lease transactions than during the pre-pandemic 2015-to-2019 average, though the smaller deal size meant total dollar volume was still roughly 10% lower. The first quarter of this year changed that equation.
"In Q1, there was a surge in the number of deals that brought volume to the pre-pandemic average on a quarterly basis," Mobley says.
The term "smaller deals," he adds, can be misleading. The activity includes both growing mid-sized firms relocating and large corporations downsizing into tighter footprints. The result is a market whose total supply and demand appear flat, even as transaction volume keeps accelerating.
"It is occupiers sorting themselves into the best locations and out of the worst," Mobley says.
"It's one of those things that, at a very high level, doesn't look like there is much going on. We've got a very high and stable vacancy rate, very close to its all-time high, but occupancy is very little changed."
That dynamic is putting more pressure on landlords and developers to differentiate.
"To be competitive as an owner, your building has to be good enough to steal market share from somebody else," Mobley says, pointing to stagnant job and population growth.
"Whether you're in Dallas or Miami or Charlotte and steal it from the Northeast, or from another part of town, your building has to be good enough at the right time to justify a tenant at one place leaving for your place."
Even then, he adds, the economics must work. "It must be advantageous enough for a company to justify all the expenses, whether increased rents, the 'underappreciated factor' of moving costs, or construction pricing that is significantly higher from five years ago."
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