Major brokerage house reports indicate that the U.S. office sector extended its gradual recovery in the third quarter, with vacancies easing and new construction activity sitting near historic lows. National summaries from CBRE, JLL, Cushman & Wakefield, Colliers and Lee & Associates all showed year-over-year vacancy declines alongside a sharp pullback in new supply, as tenants continued to focus on higher-quality assets.
Across the reporting platforms, measured vacancy rates varied but all trended modestly lower. Colliers cited a national vacancy rate of 17.7%, down 60 basis points from a year earlier and the tightest level since late 2023. CBRE also recorded a 60-basis-point annual improvement, putting vacancy at 18.2% and registering a fifth straight quarter of declines. Cushman & Wakefield calculated vacancy at 19.8%, 30 basis points below its third-quarter 2025 peak. JLL reported vacancy at 21.5%, while Lee & Associates put its tracked rate at 13.8%, roughly 20 basis points below its 2025 high.
Leasing trends underscored a continued preference for higher-end space. CBRE reported that national leasing volume rose 4% year-over-year to 63.8 million square feet, the strongest quarterly tally since the fourth quarter of 2024, and projected that total 2026 leasing could exceed the firm’s prior record set in 2022. JLL noted that leases signed over the last 12 months featured average space commitments about 13% larger, even as many occupiers pursue broader footprint reductions.
All five firms observed that quality remains a key differentiator for demand. Cushman & Wakefield reported that Class A space represented about two-thirds of third-quarter leasing activity, above its 10-year average share of 61%. Colliers highlighted continued demand from AI and technology users, while Lee & Associates pointed to tighter in-office attendance policies at major financial institutions and leasing by AI-focused startups in San Francisco and Silicon Valley, CA, as supportive forces for select submarkets.
New supply remains constrained. CBRE reported that completions fell 76% year-over-year to 1.5 million square feet in the third quarter, putting 2026 on pace for the lowest annual completion volume since the firm began tracking in 1990. JLL said that 9.6 million square feet of office inventory were removed from stock during the quarter for conversion or redevelopment, with new completions totaling 3.5 million square feet. Since late 2023, JLL’s data show overall office inventory shrinking by more than 45 million square feet.
Construction pipelines appear to be stabilizing at low levels. Cushman & Wakefield estimated 23 million square feet of office space under construction, up 20% from its first-quarter trough, while CBRE measured a modest increase to 20.1 million square feet, driven largely by new starts in Manhattan and Miami, FL.
Net absorption readings were positive for most firms but differed in scale. Colliers reported 9.5 million square feet of positive net absorption, its ninth consecutive quarter of gains. JLL cited its sixth straight positive quarter, with 5 million square feet absorbed. CBRE tallied 4.9 million square feet and said positive absorption has now extended for 10 quarters. Cushman & Wakefield reported a modest 50,000 square feet of positive absorption, marking its fifth consecutive positive quarter. In contrast, Lee & Associates recorded negative absorption for the period, ending four quarters of growth and attributing roughly 70% of the pullback to Class B properties.
Looking ahead to year-end, JLL expects interest rate volatility to slow some sales activity and push out lease decision timelines, though it noted that tenant requirements in key markets remain above prior-year levels. Cushman & Wakefield suggested that a thin construction pipeline should help underpin market fundamentals against broader economic headwinds, while Colliers described its outlook as one of gradual improvement rather than a rapid, broad-based recovery.
