Can the Office Market Regain its Footing in 2025

Office Real Estate Finds Footing​

Office Sector Slowly Rebounding After Pandemic Shock​

• Office vacancy rose from 12.3% before the pandemic to a peak of 17.2% in Q1 2024​

• Positive absorption returned over the last 4 quarters, bringing vacancy down to 16.7%​

Performance Varies Sharply by Market and Property Type​

• Urban vacancy is 19.2%, while suburban is 16% — but small, newer suburban offices average just 11.2%​

• Markets like Dallas, Charlotte, NYC, and Chicago have posted multiple quarters of positive office absorption​

• Struggling markets include San Francisco (27% vacancy) and Boston, with ongoing negative demand​

Outlook Uncertain, but Construction is Low​

• Limited construction and return-to-office trends could support further improvement​

• Rising unemployment may paradoxically lift office demand in 2025​

* Through 1Q​
Sources: Marcus & Millichap Research Services, CoStar Group, Inc.​​

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