First-quarter 2026 reporting from major brokerages points to a U.S. office sector that is slowly regaining its footing as leasing volumes climb and the construction pipeline contracts. Across multiple datasets, analysts highlight that a combination of shrinking inventory and strengthening demand is helping the market move toward balance rather than further deterioration.
Several firms note that net absorption has recently turned a corner, remaining in positive territory for stretches ranging from two to seven consecutive quarters depending on the report. Cushman & Wakefield’s MarketBeat is a partial outlier, citing negative net absorption for Q1 itself, but the firm still characterizes the trend line as improving. On a four-quarter rolling basis, its research shows more than 5.2 million square feet of positive net absorption, the strongest result since the first half of 2020.
At the same time, vacancy is edging down rather than climbing. Cushman & Wakefield attributes this to the interaction of declining inventory and healthier demand, which together are preventing renewed vacancy spikes. JLL’s Office Market Dynamics report adds that the most expansionary demand is coming from large occupiers. Many of these users are now confronting space constraints created by early-pandemic decisions to emphasize flexibility, which are now colliding with more normalized office attendance patterns.
CBRE’s Office Market Report projects that overall U.S. office leasing activity in 2026 will surpass 2019 levels, underscoring the recovery in transaction volume even as users continue to refine hybrid work strategies. That demand recovery is occurring against a backdrop of notably muted new development. Colliers reports that the current construction pipeline is materially smaller than its 2019 peak, and that new office projects continue to fall away.
JLL observes that while interest in office construction has not disappeared, high demand for construction labor in other sectors, including data centers, is contributing to extended development timelines. These dynamics are intersecting with rapid growth in artificial intelligence and related infrastructure needs. Cushman & Wakefield urges investors and tenants to monitor economic, capital markets, labor and property-level indicators as AI reshapes where and how work is done.
JLL acknowledges that investor concerns about AI-driven job loss in office-using sectors are influencing public equity markets, but its analysts see a more nuanced outcome. They expect AI to automate discrete tasks rather than entire roles, with most jobs preserved and human work redirected to different responsibilities.
Looking ahead, the research highlights that macroeconomic uncertainty could still weigh on office-using employment strategies, even as those jobs are now tentatively expanding. On the supply side, Cushman & Wakefield notes that inflationary pressures and geopolitical risk are pushing up construction and fit-out costs, particularly for top-tier space. With limited new supply, conversions reducing existing inventory, and JLL forecasting a 50 million-square-foot net inventory decline by 2030, availability for trophy-quality space is expected to reach historic lows in many U.S. markets.
