As commercial real estate brokers, we know the office sector has been the headline-grabber for the last few years and often for the wrong reasons. Juan Arias, National Director of U.S. Analytics at CoStar Group, joined our recent 2026 Economic Outlook and gave a breakdown of what to keep an eye on in the office market for the year ahead.
Based on Arias’s analysis, here are the five key office trends you need to watch in 2026.
1. Vacancy Rates Will Remain at Historic Highs
Office vacancy rates are currently “the highest that we’ve ever tracked at 14%”. Unlike other sectors where we might expect a cyclical bounce-back, Arias cautions that we shouldn’t expect a “significant contraction in vacancy rates” anytime soon. This sticky vacancy is driven by broader structural headwinds, specifically “slower labor force growth” and “slower office using employment growth,” which will act as a drag on overall demand going forward.
2. Tenants Are “Right-Sizing” into Quality
While leasing activity has recovered from the lows of 2021, it still hasn’t reached pre-pandemic averages. The critical shift here is in how tenants are leasing. Arias notes that the “average transaction size… has come down significantly from prepandemic levels”. Companies are now trading quantity for quality, “signing higher quality space at smaller size ranges” to prioritize efficiency and experience over massive footprints.
3. The “Obsolescence Risk” is Highly Concentrated
The pain in the office market is not evenly distributed. One of the most striking stats is that “most of the vacancy… is concentrated in 20% of buildings”. This vacancy is overwhelmingly found in “older suburban 1980s vintage type properties.” If you are representing these assets, the challenges are acute, whereas the remaining 80% of the market is healthier than the headlines suggest.
4. Return-to-Office Has a Ceiling (and it Varies by City)
We are seeing people return to the workplace, with office attendance creeping up higher. However, it has not fully recovered, hovering “still around 70%” nationally. Crucially, this varies wildly by geography. Arias points out that markets like Miami and New York, Dallas and Atlanta are seeing much healthier attendance figures, whereas markets like Chicago or San Francisco continue to lag behind.
5. Demand is Geographically Uneven
Just as attendance varies, so does leasing performance. The “flight to quality” isn’t just about the building; it’s about the market. Arias highlights that leasing activity has been healthiest in specific growth hubs like Charlotte, New York, Boston, Miami and Dallas. Demand is concentrated heavily in high quality office space in certain markets where we’ve seen employment and demographic growth, while other markets continue to see below-average leasing activity relative to pre-pandemic norms.
Office is only part of the story. See how the multifamily market is shaping up in our breakdown of the 5 multifamily trends to watch in 2026.
This article is provided for general informational purposes only and does not constitute investment, legal, tax, or financial advice, nor a solicitation to buy or sell any security or real estate interest. Readers should consult their own professional advisors before making any investment or business decisions. Market data provided by CoStar Group.The views expressed reflect individual market perspectives and do not represent investment recommendations or company forecasts. Certain statements may be forward-looking in nature and are based on current expectations, which are subject to change due to economic and market conditions.