Q3 2025 Office Occupier Outlook

Commercial Real Estate Market at Crossroad: Balancing Recovery, Higher Rates and Evolving Work Trends

Office Market May Have Hit Inflection Point as Fundamentals Improve

The office market showed signs of recovery in the third quarter of 2025, indicating a potential turning point. Both vacancy and availabilities have receded, while net absorption and occupancy posted meaningful gains. Still, the positive performances are not uniform, with New York and Dallas outperforming, while Chicago, Washington, DC, and several large West Coast markets continue to search for stability. A full recovery remains in the distant future, as leasing activity and average deal size continue to lag pre-pandemic levels. On the supply side, growth has slowed to a trickle, which looks to linger for several years. The result should help to backfill existing buildings. However, with weak knowledge worker job expansion and a softening economy, there are still roadblocks to navigate in the near-term. Additional time is needed to understand if recent positive signs mark an inflection point for the broader office market.

Office Tenant View: 

• Asking rates for top-tier, prime space have held firm, but landlords are still aggressively providing incentives to attract tenants, particularly stable, good credit companies.
• Many firms remain cautious about expansion plans, but with limited new products coming online, occupiers are feeling more secure in making decisions about rightsizing their space before the next up-cycle.
• Office attendance is gradually rising, resulting in some occupiers re-examining their current space configuration.

Download the full report to learn more.