U.S. office vacancy appears to have reached a cyclical peak in mid-2025. The rate topped out at 14.2% before easing slightly by year-end. According to an updated CoStar forecast, vacancy is expected to remain stable through the end of 2026. A gradual decline is projected thereafter, reaching roughly 13% by 2030.
This outlook is more optimistic than prior forecasts. Earlier projections expected vacancy to rise through late 2026 and remain elevated for years. The shift reflects improving tenant demand in the second half of 2025. Per-employee space needs have stabilized, even as office-using job growth remains muted.
At the same time, office inventory is shrinking. More than 35 million square feet was removed in 2025 through conversions and demolitions. That total exceeded the long-term annual average by roughly 10 million square feet. Additional removals are expected as pricing stabilizes and redevelopment activity increases.
Limited new construction is also supporting the outlook. Construction starts have remained near record lows since mid-2023. As a result, vacancy is expected to ease slowly after 2026. The pace will depend on job growth and redevelopment activity. Rent growth is projected to remain modest through 2026. Annual growth is expected to stay below 1% until early 2027.
Looking ahead, demand for well-located and high-quality space remains strong. In some markets, this includes assets outside the traditional Class A category. Risks remain balanced. Office attendance trends could drive space needs higher, even without strong hiring. However, productivity gains tied to artificial intelligence may limit job growth. That could temper long-term office demand.
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