Five Office Market Trends to Watch as Conditions Normalize

After several years of disruption, the office market is beginning to show signs of stabilization. Recovery remains uneven across asset types and geographies. As companies improve their hybrid work plans, they are looking closely at their long-term space needs. 

The five trends below show how workers are changing to meet new workplace expectations. These changes will impact office strategies in the future.

1. Flight-to-Quality

Since the start of the pandemic, the overall office market has lost occupied space, revealing a clear divide. High-quality, amenity-rich offices (often referred to as Trophy or amenitized Class A office spaces) have maintained stable or even improved occupancy rates. In contrast, lower-quality assets have faced significant challenges. As companies adjust their workforces, many are using cost savings to upgrade spaces, choosing locations that help entice employees back to the office and attract new talent.

This flight-to-quality is expected to continue, tightening available supply for top-tier offices, particularly large block spaces (over 50,000 square feet). Additionally, the pipeline for new construction has slowed to a trickle, elevating demand.

Key Consideration: Sublease Opportunities — As larger occupiers reduce their footprints within top-tier buildings, sublease opportunities are emerging in smaller and mid-sized space blocks. These spaces often provide cost advantages through reduced tenant improvement requirements and shorter commitment periods.

2. Flexible Work Models

People have mostly settled the argument for returning to the office. Hybrid work setups are now common in many industries. Smaller footprints, hot-desking, flexible work zones, and collaborative or multipurpose layouts are now central to office design. While these trends began prior to the pandemic, today’s emphasis is on intentional efficiency.

Demand continues to rise for coworking offices, serviced offices, and properties offering flexible lease structures.

Key Consideration: Hub-and-Spoke Strategies — Distributed workplace models, including satellite and suburban offices, are gaining traction as organizations seek proximity to talent while maintaining centralized collaboration hubs.

3. Adaptive Re-Use Conversions

Declining demand for traditional office layouts has increased interest in converting underutilized office buildings into residential, mixed-use, or alternative property types. These conversions help absorb surplus office supply while aligning with growing demand for live-work-play environments in both urban and suburban markets.

Since early 2020, more than 150 office buildings have traded with conversion intent, and roughly 70,000 units are currently in the pipeline, according to Yardi Matrix. However, high construction costs and elevated borrowing rates remain significant barriers. Conversion activity may accelerate if financing conditions continue to ease.

Key Consideration: Local Policy Support — Cities such as Los Angeles have used zoning changes and incentives to facilitate office-to-residential conversions, and more municipalities are expected to follow suit.

4. Market Stabilization

The office market has recorded more than 280 million square feet of negative net absorption since 2020—nearly 5 percent of total U.S. inventory. However, several indicators suggest the market has reached a turning point. Class A office space is on track to post modest net absorption gains in 2025, and availability rates have declined for five consecutive quarters.

As pre-pandemic leases expire and companies recalibrate their space needs, the market is entering a transitional period of gradual stabilization. New office supply is also declining, with construction starts at their lowest levels in decades.

Key Consideration: Sublease as a Cost-Control Tool — Sublease space remains an attractive option for occupiers seeking flexibility, shorter commitments, and cost savings during this transitional phase.

5. Regional Divergence

While national office metrics show modest improvement, particularly for Class A space—performance varies widely by market. Local economic drivers, industry mix, and return-to-office policies are proving more influential than national trends.

Markets supported by collaboration-heavy industries have outperformed. New York has returned to pre-pandemic occupancy rates, supported by financial services and law firms, while Miami continues to benefit from corporate relocations. Conversely, Los Angeles and Seattle face ongoing challenges tied to weaker office attendance and tech-sector layoffs.

Key Consideration: Secondary and Sunbelt Markets — Fast-growing markets such as Atlanta and Charlotte are positioned for improvement, particularly in well-located urban submarkets and highly amenitized suburban office nodes.

As the office market moves through its next phase, recovery will be shaped less by broad national trends and more by asset quality, location, and flexibility. Occupiers are prioritizing environments that support collaboration, efficiency, and talent attraction, while also maintaining the ability to adapt as workforce needs evolve. Understanding these five trends can help organizations navigate ongoing uncertainty, identify opportunities in a shifting market, and align office strategy with long-term business objectives as conditions continue to normalize.