Inside the Office Market's Flight to Quality: What Occupiers Need to Know

Top-Tier Buildings Outperform Lower-Tier Buildings in Large Office Market Urban Cores

The flight-to-quality trend that emerged during the pandemic continues to create a clear divide between top-tier office buildings and the rest of the market.

As companies reassessed their space needs, reduced footprints and gained greater negotiating leverage, many found an opportunity to move into higher-quality buildings while keeping occupancy costs manageable. At the same time, employers began placing greater value on offices that could help attract employees back in person.

The result is a growing preference for modern, well-located buildings with strong amenities, efficient layouts and access to vibrant surrounding neighborhoods. Across major urban office markets, these top-tier properties are increasingly outperforming lower-tier Class A and Class B buildings.

The Premium for Top-Tier Office Space is Growing

Occupiers have historically paid more for the best buildings in a market, but the gap has widened considerably in recent years.

In 2016, top-tier Class A office space carried an average lease-rate premium of approximately 19.2% over lower-tier Class A and Class B buildings. By the second quarter of 2026, that premium had increased to 29.4%.

This widening spread suggests that companies are willing to pay more for space that can deliver a stronger employee experience, support workplace goals and reinforce their ability to attract and retain talent.

For occupiers, however, a higher lease rate does not necessarily mean an upgrade is out of reach. Reduced space requirements, landlord concessions and favorable negotiating conditions may help offset some of the cost difference—particularly for organizations that can become more efficient in how they use their space.

Vacancy Trends Reveal a Divided Market

Vacancy also reflects the growing separation between top-tier and lower-tier properties.

At the beginning of the pandemic, direct vacancy rates for top-tier buildings were generally higher than those for lower-tier buildings. That relationship has since reversed.

By the second quarter of 2026, direct vacancy stood at:

• 13.7% for top-tier Class A buildings
• 18.4% for lower-tier Class A and Class B buildings

While both segments experienced disruption, top-tier properties have recovered more effectively. Lower-tier buildings continue to face greater vacancy pressure as tenants consolidate into newer, more competitive space.

This divergence could become increasingly important for occupiers evaluating long-term lease decisions. Buildings with elevated vacancy may present attractive economic opportunities, but they can also carry greater risks related to future investment, amenities, operating performance and ownership stability.

Net Absorption Has Favored the Best Buildings

Net absorption provides another indication of where demand is concentrating.

Since the beginning of the third quarter of 2020, top-tier office buildings in the central business districts of major U.S. markets have recorded 33.7 million square feet of positive net absorption. Over the same period, lower-tier Class A and Class B buildings have experienced 105.5 million square feet of negative net absorption.

In other words, companies have continued to move into the best available buildings even as the broader office market has contracted.

The pattern shows that the flight to quality is more than a preference for newer finishes. It represents a broader reassessment of the role of the office. Many organizations may need less space than they did before the pandemic, but they are placing greater expectations on the space they retain.

Leasing Activity Remains Stronger in Top-Tier Properties

Leasing activity has also generally been more resilient among top-tier buildings.

Following the sharp decline in activity during 2020, the number of signed leases in top-tier properties recovered more quickly and has remained above activity in lower-tier buildings. Through the first half of 2026, the gap widened as leasing in lower-tier properties declined more sharply.

This performance reinforces the importance of looking beyond overall market statistics. A city may report elevated vacancy and soft demand, but conditions can vary significantly by building quality, location and ownership.

What the Flight to Quality Means for Occupiers

The current market may offer occupiers a valuable window to reconsider whether their existing space still supports their business and workforce needs.

Companies approaching a lease expiration should evaluate:

• Whether a higher-quality building could improve the employee experience
• How a smaller or more efficient footprint could help fund an upgrade
• Which concessions and improvement allowances are available
• Whether the building owner is positioned to maintain and invest in the property
• How location, amenities and surrounding services align with employee expectations

The strongest opportunity may not simply be securing the lowest rental rate. It may be finding the space that delivers the greatest value across cost, workplace performance and long-term flexibility.

As top-tier and lower-tier buildings continue to follow different trajectories, occupiers will need a detailed understanding of conditions at the building level. A thoughtful real estate strategy can help organizations take advantage of market leverage while choosing space that supports their people and broader business goals.

Our full Occupier Outlook Office report takes a deeper dive into these dynamics, offering data-backed insights and guidance to help occupiers navigate an office market in transition.

Note: This analysis includes buildings rated as Top-Tier Class A (5 Star) and Lower-Tier Class A, and Class B buildings (3 & 4 Star) with a minimum of 50,000 square feet located within the CBD. Owner-occupied buildings were removed. The top 13 office markets in terms of inventory were included: New York, Los Angeles, Chicago, Houston, Dallas, Philadelphia, Washington, DC, Atlanta, Phoenix, Miami, San Francisco, Seattle, and Boston. Data thru Q2 2026