
Q1 data shows improving leasing momentum in New York, San Francisco and Orange County, while shrinking supply and falling sublease space begin to rebalance conditions


The U.S. office market is beginning to stabilize,

Q1 data shows improving leasing momentum in New York, San Francisco and Orange County, while shrinking supply and falling sublease space begin to rebalance conditions


The U.S. office market is beginning to stabilize, with improving demand, flat vacancy and a sharp pullback in new supply signaling a shift from broad-based decline to a more selective recovery.


While overall office absorption was negative in the first quarter at -4.0 million square feet (msf), underlying demand has strengthened over the past year. The four-quarter rolling absorption total reached +5.2 msf, the highest level since early 2020.


"The quarterly number doesn't tell the full story," said David C. Smith, Head of Americas Insights at Cushman &amp; Wakefield. "What matters is that demand has been improving consistently over the past year, and that momentum is now showing up across a broader set of markets."


That momentum is not evenly distributed but it is spreading. In fact, if the four weakest-performing markets were excluded, national absorption over the past year would exceed +20 msf, highlighting how a limited number of markets continue to weigh on overall results.


New York is leading the recovery at scale. Midtown Manhattan recorded +8.5 msf of absorption over the past four quarters, the strongest performance in the country, while Midtown South added +2.7 msf.


Several NYC-adjacent markets have also experienced recovering demand with significant absorption over the past year: Northern New Jersey (+1.8 msf), Westchester County (+575,000 sf), Fairfield County (+427,000 sf) and Brooklyn (+243,000 sf).


San Francisco is resetting after facing challenges during the downturn. The market posted +2.4 msf of absorption and also saw the largest year-over-year reduction in sublease space of any U.S. market.


Orange County and Dallas are emerging as consistent growth markets, with +2.2 msf and +2.4 msf of absorption, respectively.


In total, 57 U.S. office markets recorded positive absorption over the past four quarters, up from 33 markets in full-year 2024.


"Demand is returning, but it's not happening everywhere at the same pace," Smith said. "A relatively small group of markets is accounting for a disproportionate share of the softness in the market, and increasingly market-level vacancy is concentrated among a smaller share of struggling buildings."


Vacancy Levels Off as Leading Markets Begin to Tighten 
 The national vacancy rate held at 20.2%, rising just 5 basis points year-over-year, the smallest annual increase since the pandemic began.


Vacancy declined over the past year in 46 of 92 tracked markets, with 22 markets recording declines of more than 100 basis points, led by San Francisco, Midtown Manhattan, Midtown South, Orange County and Austin.


"Vacancy is no longer moving in one direction nationally," Smith said. "In a growing number of markets, it has plateaued and is starting to come down, which is a meaningful shift from what we've seen over the past several years."


Sublease Space Continues to Fall Across Major Markets 
 A key driver of improving occupancy is the continued reduction in sublease space.


National sublease availability declined to 101 msf, down 25% from its peak in Q1 2024 and 13.6% year-over-year, representing a 16.0 msf reduction over the past four quarters.


Sublease space declined year-over-year in 52 U.S. markets, with the largest reductions occurring in San Francisco, Midtown Manhattan, Dallas, San Jose and Minneapolis/St. Paul, each exceeding 1 msf.


"The decline in sublease space is one of the clearest signs that the market is adjusting," Smith said. "Tenants are recommitting to their space and making longer-term decisions, and that is steadily removing excess space from the system."


New Supply Falls to Multi-Decade Lows 
 At the same time, the supply pipeline has contracted sharply.


New office completions declined 40% year-over-year in Q1, bringing the four-quarter total to 16.3 million square feet. Space under construction fell to 18.6 msf, down 4.2% quarter-over-quarter and the lowest level on record this century.


The construction pipeline now represents just 0.3% of total U.S. office inventory, down from 2.6% in 2020.


"Supply is no longer adding incremental pressure to the market," Smith said. "With new construction at historic lows, occupiers' focus will need to shift to creative solutions to find the right kind of space for the future."


Office Inventory Begins to Decline 
 Total office inventory is now contracting as well.


U.S. office stock has declined by 0.7% over the past five quarters, a reduction of approximately 38 million square feet from its peak in late 2024.


Over the past year, 20 markets recorded inventory declines of 1.0% or more, reflecting conversions, demolitions and other repositioning strategies.


Market Outlook 
 The U.S. office market is no longer weakening at a national level, but performance is increasingly defined by differences across markets, submarkets and individual buildings.


"What we're seeing is a market that is stabilizing, but in a more selective way," Smith said. "Markets with sustained demand and limited new supply are beginning to tighten, while there are a few others still working through excess space."


While some markets remain in transition, an increasing number of markets are showing a combination of positive absorption, declining vacancy and falling sublease space, supported by minimal new construction and increasing conversions.


The next phase of the cycle will be shaped by these changing supply and demand dynamics.


About Cushman &amp; Wakefield


Cushman &amp; Wakefield (NYSE:<a class="ticker" href="https://www.benzinga.com/quote/CWK">CWK</a>) is a leading global commercial real estate services firm for occupiers and investors with approximately 53,000 employees in over 350 offices and nearly 60 countries. In 2025, the firm reported revenue of $10.3 billion across its core service lines of Services, Leasing, Capital markets, and Valuation and other. Built around the belief that Better never settles, the firm receives numerous industry and business accolades for its award-winning culture. For additional information, visit <a xmlns="http://www.w3.org/1999/xhtml" rel="nofollow" href="https://cts.businesswire.com/ct/CT?id=smartlink&amp;url=http%3A%2F%2Fwww.cushmanwakefield.com&amp;esheet=54519003&amp;newsitemid=20260420248174&amp;lan=en-US&amp;anchor=www.cushmanwakefield.com&amp;index=1&amp;md5=b832326f4df662bd732544d8b451befc" shape="rect">www.cushmanwakefield.com</a>.

<img xmlns="http://www.w3.org/1999/xhtml" alt="" src="https://cts.businesswire.com/ct/CT?id=bwnews&amp;sty=20260420248174r1&amp;sid=benz2&amp;distro=nx&amp;lang=en" style="width:0;height:0"></img>View source version on businesswire.com: <a xmlns="http://www.w3.org/1999/xhtml" href="https://www.businesswire.com/news/home/20260420248174/en/" rel="nofollow">https://www.businesswire.com/news/home/20260420248174/en/</a>
MEDIA CONTACT:
 Garrett Derderian 
 VP, Americas Corporate Communications
 +1 917 291 9159
 <a xmlns="http://www.w3.org/1999/xhtml" rel="nofollow" href="mailto:garrett.derderian@cushwake.com" shape="rect">garrett.derderian@cushwake.com</a>

U.S. Office Market Stabilizes as Demand Concentrates in Leading Markets and Supply Continues to Contract

Cushman & Wakefield Reports Stabilizing U.S. Office Market Dynamics

<section class="insight" data-version="1">
 <section data-block="information">
 <h3>Information</h3>
 Q1 data shows improving leasing momentum in New York, San Francisco and Orange County, while shrinking supply and falling sublease space begin to rebalance conditions


The U.S. office market is beginning to stabilize,
 </section>

 <section data-block="ai-summary-paragraph">
 <h3>AI Summary</h3>
 Cushman &amp; Wakefield&#039;s latest report highlights a stabilization in the U.S. office market, showing improving demand and declining vacancy rates. These trends are likely to bolster leasing activities and positively impact revenue for CWK as market dynamics shift toward recovery.
 </section>

 <section data-block="ai-summary-bullets">
 <h3>Key Points</h3>
 <ul><li>U.S. office market stabilizing, signaling selective recovery.</li><li>Absorption reached +5.2 million square feet, highest since early 2020.</li><li>Vacancy flat at 20.2%, smallest increase since pandemic began.</li><li>Sublease availability down 25% from peak, indicating tenant commitment.</li><li>New office supply at historic lows, reducing market pressure.</li></ul>
 </section>

 <section data-block="companies-mentioned">
 <h3>Companies Mentioned</h3>
 <ul><li>CBRE Group (CBRE): As a competitor, CBRE may also benefit from market stabilization.</li><li>JLL (JLL): Similar market trends may positively impact JLL’s performance too.</li></ul>
 </section>

 <section data-block="category">
 <h3>Industry News</h3>
 This article fits under &#039;Industry News&#039; as it discusses the current trends and dynamics affecting the U.S. office market where Cushman &amp; Wakefield operates. The insights provided can significantly influence investor sentiment and CWK&#039;s market positioning.
 </section>

 <section data-block="market-moving">
 <h3>Market-Moving</h3>
 <ul><li>Increasing demand in key markets such as New York could drive CWK&#039;s leasing revenues.</li><li>Declining vacancy rates may enhance CWK&#039;s property valuations and profitability.</li><li>Falling sublease availability indicates tenant confidence, supporting CWK&#039;s market position.</li><li>New construction at historic lows suggests pricing power for CWK&#039;s leasing operations.</li></ul>
 </section>

 <section data-block="key-facts">
 <h3>Key Facts</h3>
 <ul><li>Absorption reached +5.2 million square feet in the last four quarters.</li><li>U.S. national vacancy rate stands at 20.2%, unchanged year-over-year.</li><li>Sublease availability declined to 101 million square feet, down 25% from peak.</li><li>New office completions fell 40% year-over-year in Q1 2025.</li><li>U.S. office stock reduced by 0.7% over past five quarters.</li></ul>
 </section>

 <section data-block="trading-thesis">
 <h3>Trading Thesis</h3>
 Investors should consider buying CWK shares in light of the improving office market fundamentals over the next 6-12 months.
 </section>
</section>



Q1 data shows improving leasing momentum in New York, San Francisco and Orange County, while shrinking supply and falling sublease space begin to rebalance conditions


The U.S. office market is beginning to stabilize, with improving demand, flat vacancy and a sharp pullback in new supply signaling a shift from broad-based decline to a more selective recovery.


While overall office absorption was negative in the first quarter at -4.0 million square feet (msf), underlying demand has strengthened over the past year. The four-quarter rolling absorption total reached +5.2 msf, the highest level since early 2020.


"The quarterly number doesn't tell the full story," said David C. Smith, Head of Americas Insights at Cushman &amp; Wakefield. "What matters is that demand has been improving consistently over the past year, and that momentum is now showing up across a broader set of markets."


That momentum is not evenly distributed but it is spreading. In fact, if the four weakest-performing markets were excluded, national absorption over the past year would exceed +20 msf, highlighting how a limited number of markets continue to weigh on overall results.


New York is leading the recovery at scale. Midtown Manhattan recorded +8.5 msf of absorption over the past four quarters, the strongest performance in the country, while Midtown South added +2.7 msf.


Several NYC-adjacent markets have also experienced recovering demand with significant absorption over the past year: Northern New Jersey (+1.8 msf), Westchester County (+575,000 sf), Fairfield County (+427,000 sf) and Brooklyn (+243,000 sf).


San Francisco is resetting after facing challenges during the downturn. The market posted +2.4 msf of absorption and also saw the largest year-over-year reduction in sublease space of any U.S. market.


Orange County and Dallas are emerging as consistent growth markets, with +2.2 msf and +2.4 msf of absorption, respectively.


In total, 57 U.S. office markets recorded positive absorption over the past four quarters, up from 33 markets in full-year 2024.


"Demand is returning, but it's not happening everywhere at the same pace," Smith said. "A relatively small group of markets is accounting for a disproportionate share of the softness in the market, and increasingly market-level vacancy is concentrated among a smaller share of struggling buildings."


Vacancy Levels Off as Leading Markets Begin to Tighten 
 The national vacancy rate held at 20.2%, rising just 5 basis points year-over-year, the smallest annual increase since the pandemic began.


Vacancy declined over the past year in 46 of 92 tracked markets, with 22 markets recording declines of more than 100 basis points, led by San Francisco, Midtown Manhattan, Midtown South, Orange County and Austin.


"Vacancy is no longer moving in one direction nationally," Smith said. "In a growing number of markets, it has plateaued and is starting to come down, which is a meaningful shift from what we've seen over the past several years."


Sublease Space Continues to Fall Across Major Markets 
 A key driver of improving occupancy is the continued reduction in sublease space.


National sublease availability declined to 101 msf, down 25% from its peak in Q1 2024 and 13.6% year-over-year, representing a 16.0 msf reduction over the past four quarters.


Sublease space declined year-over-year in 52 U.S. markets, with the largest reductions occurring in San Francisco, Midtown Manhattan, Dallas, San Jose and Minneapolis/St. Paul, each exceeding 1 msf.


"The decline in sublease space is one of the clearest signs that the market is adjusting," Smith said. "Tenants are recommitting to their space and making longer-term decisions, and that is steadily removing excess space from the system."


New Supply Falls to Multi-Decade Lows 
 At the same time, the supply pipeline has contracted sharply.


New office completions declined 40% year-over-year in Q1, bringing the four-quarter total to 16.3 million square feet. Space under construction fell to 18.6 msf, down 4.2% quarter-over-quarter and the lowest level on record this century.


The construction pipeline now represents just 0.3% of total U.S. office inventory, down from 2.6% in 2020.


"Supply is no longer adding incremental pressure to the market," Smith said. "With new construction at historic lows, occupiers' focus will need to shift to creative solutions to find the right kind of space for the future."


Office Inventory Begins to Decline 
 Total office inventory is now contracting as well.


U.S. office stock has declined by 0.7% over the past five quarters, a reduction of approximately 38 million square feet from its peak in late 2024.


Over the past year, 20 markets recorded inventory declines of 1.0% or more, reflecting conversions, demolitions and other repositioning strategies.


Market Outlook 
 The U.S. office market is no longer weakening at a national level, but performance is increasingly defined by differences across markets, submarkets and individual buildings.


"What we're seeing is a market that is stabilizing, but in a more selective way," Smith said. "Markets with sustained demand and limited new supply are beginning to tighten, while there are a few others still working through excess space."


While some markets remain in transition, an increasing number of markets are showing a combination of positive absorption, declining vacancy and falling sublease space, supported by minimal new construction and increasing conversions.


The next phase of the cycle will be shaped by these changing supply and demand dynamics.


About Cushman &amp; Wakefield


Cushman &amp; Wakefield (NYSE:<a class="ticker" href="https://www.benzinga.com/quote/CWK">CWK</a>) is a leading global commercial real estate services firm for occupiers and investors with approximately 53,000 employees in over 350 offices and nearly 60 countries. In 2025, the firm reported revenue of $10.3 billion across its core service lines of Services, Leasing, Capital markets, and Valuation and other. Built around the belief that Better never settles, the firm receives numerous industry and business accolades for its award-winning culture. For additional information, visit <a xmlns="http://www.w3.org/1999/xhtml" rel="nofollow" href="https://cts.businesswire.com/ct/CT?id=smartlink&amp;url=http%3A%2F%2Fwww.cushmanwakefield.com&amp;esheet=54519003&amp;newsitemid=20260420248174&amp;lan=en-US&amp;anchor=www.cushmanwakefield.com&amp;index=1&amp;md5=b832326f4df662bd732544d8b451befc" shape="rect">www.cushmanwakefield.com</a>.

<img xmlns="http://www.w3.org/1999/xhtml" alt="" src="https://cts.businesswire.com/ct/CT?id=bwnews&amp;sty=20260420248174r1&amp;sid=benz2&amp;distro=nx&amp;lang=en" style="width:0;height:0"></img>View source version on businesswire.com: <a xmlns="http://www.w3.org/1999/xhtml" href="https://www.businesswire.com/news/home/20260420248174/en/" rel="nofollow">https://www.businesswire.com/news/home/20260420248174/en/</a>
MEDIA CONTACT:
 Garrett Derderian 
 VP, Americas Corporate Communications
 +1 917 291 9159
 <a xmlns="http://www.w3.org/1999/xhtml" rel="nofollow" href="mailto:garrett.derderian@cushwake.com" shape="rect">garrett.derderian@cushwake.com</a>

Cushman & Wakefield's latest report highlights a stabilization in the U.S. office market, showing improving demand and declining vacancy rates. These trends are likely to bolster leasing activities and positively impact revenue for CWK as market dynamics shift toward recovery.

U.S. Office Market Stabilizes as Demand Concentrates in Leading Markets and Supply Continues to Contract

AI Summary

Sentiment Rationale

Trading Thesis

Market-Moving

Key Facts

Companies Mentioned

Industry News

Related News