Demand continues to grow, while supply pressures become more extreme
27 July 2026
Insight
27 July 2026
U.S. Office Market Dynamics, Q2 2026
Categories:
Authors
Jacob Rowden
- Leasing activity established a new post-pandemic high in Q2 2026 and is up 27% over the trailing 12 months relative to the previous 5-year average.
- The Aerospace & Defense (+37%) and Legal Services sectors (+31%) have shown the greatest increase in leasing volume relative to pre-pandemic levels.
- The Technology sector led total leasing volume, boosted by AI-driven organizations.
- A significant uptick in absorption in Q2 has driven over 30 million s.f. of occupancy gains over the past 12 months.
- Total vacancy rates are now declining aggressively with a 60 bps reduction QoQ. Availability has declined rapidly for eight consecutive quarters.
- The construction pipeline has marginally increased for two straight quarters but remains extremely depressed by historical standards.
- Groundbreakings have not shown any meaningful acceleration despite isolated large-scale groundbreakings in select high-rent markets.
- Newer buildings have become exceptionally rare in most markets, driving aggressive rent growth for high-end spaces and a growing share of ultra-high-rent leasing activity.
- Leasing volume with rent over $100 p.s.f. has reached record volumes in the past 12 months, and effective rents for new construction are growing over 20% on a rolling 12-month basis.