The U.S. office sector is showing early signs of stabilization even as first-quarter results for 2026 remain in negative territory, according to new research from Cushman & Wakefield. The firm reported that demand indicators have been steadily improving, while vacancy has flattened and new office construction has slowed sharply, together supporting a shift from a broad downturn toward a more selective recovery.
In the first quarter of 2026, overall U.S. office absorption totaled -4.0 million square feet, underscoring that the market has not fully turned the corner on space givebacks. However, Cushman & Wakefield highlighted that this quarterly figure masks a more constructive trend building over the past year. On a four-quarter rolling basis, U.S. office absorption reached +5.2 million square feet, the strongest result since early 2020, signaling that net demand has turned modestly positive at the national level.
David C. Smith, head of Americas Insights at Cushman & Wakefield, noted that focusing solely on the latest quarter understates the underlying momentum. He emphasized that demand has been improving consistently over the past year and that this improvement is now appearing across a wider range of U.S. office markets, rather than being confined to a small group of outperforming locations.
This broadening trend is reflected in the number of markets recording positive absorption over the past four quarters. Cushman & Wakefield reported that 57 U.S. office markets posted net occupancy gains during that period, up from 33 markets that achieved positive absorption in full-year 2024. The increase suggests that more metros are beginning to stabilize as tenants slowly re-engage, even while some markets continue to see net givebacks.
Vacancy trends also point to gradual healing in parts of the market. Out of 92 office markets tracked by Cushman & Wakefield, vacancies fell over the past year in 46, indicating that roughly half of the markets are now seeing some tightening. Within that group, 22 markets experienced vacancy declines of more than 100 basis points, led by San Francisco, Midtown Manhattan, Midtown South, Orange County and Austin. These locations stand out as some of the clearest examples where space utilization and leasing have improved enough to measurably reduce the amount of vacant inventory.
At the same time, the report underscores that new development has pulled back sharply, which is helping to limit additional supply pressure. With construction starts slowing and many projects deferred or canceled, landlords in recovering markets may benefit from less competition from new deliveries as demand gradually rebuilds. Taken together, improving four-quarter absorption, stabilizing vacancy in many markets and reduced development activity suggest that the U.S. office sector is transitioning from a period of broad-based decline into a more nuanced environment, where performance will differ significantly by market and asset profile.
