**Can the Office Market Regain Its Footing in 2025? An Inside Look at Recovery Trends**
The office sector has endured a challenging few years, weathering a one-two punch that began with the COVID-19 pandemic and was followed by widespread shifts in workplace behavior, most notably the rise of work-from-home arrangements. These changes have translated into higher vacancy rates and lower absorption across the country.
That’s only part of the picture, though.
In a recent analysis, John Chang, Senior Vice President at Marcus & Millichap, acknowledged the initial hit office demand took due to the pandemic. But to really assess where the market stands—and where it might be going—he emphasized the importance of looking deeper into regional dynamics and property types.
**Suburban vs. Urban Office Trends**
Data for the first quarter of 2025 reveals key differences between suburban and urban office markets. According to Marcus & Millichap, suburban office vacancy rates currently average 16%, whereas urban core offices are seeing higher vacancies at 19.2%.
Interestingly, not all suburban offices are created equal. Newer, smaller suburban office buildings are performing better, boasting an average vacancy rate of just 11.2%. By contrast, older, larger office towers are dealing with a significant 26.7% vacancy rate.
“Performance varies greatly on a metro-by-metro basis,” said Chang, highlighting the complexity and variability of the office market’s recovery. “It’s a real patchwork across the country.”
**Metro-Level Office Market Performance**
Office performance is ultimately tied to a combination of factors—migration trends, job creation, and regional political climate—all of which influence market fundamentals and absorption patterns. As such, recovery trajectories differ drastically from one city to the next.
Here’s a look at cities showing positive momentum:
– **Dallas**: Six consecutive quarters of positive office absorption
– **Charlotte, NC**: Five straight quarters of positive absorption
– **New York City**: Four quarters of positive growth
– **Other strong-performing metros**: Atlanta, Houston, Inland Empire, Miami, Orlando, Philadelphia, Sacramento, and St. Louis (each with at least four quarters of positive absorption)
But not all markets are trending upward. Some cities continue to struggle:
– **Oakland, CA**: Negative absorption in 10 of the last 13 quarters
– **San Francisco**: Also showed negative absorption over 10 of the last 13 quarters
– **Boston**: Nine straight quarters of negative absorption
**What Lies Ahead for the Office Sector?**
Looking to the future, Chang expects a continued decrease in vacancy rates, especially with limited new office supply and increasing mandates bringing employees back to the office. However, he also notes that economic instability adds layers of uncertainty.
“There is recession risk, and it’s possible that rising unemployment could drive more employees back into offices, actually lifting space demand,” he explained.
The long-term forecast remains tentative. While modest gains in office demand are expected in 2025, the outlook depends on several unpredictable variables, including economic trends, trade policies, and broader market behaviors.
“Our baseline forecast suggests a modest gain in space demand this year, but a lot of the variables are still up in the air,” Chang concluded.
The office market recovery may not be linear, but signs of resilience and regional growth suggest that its footing may be stronger than it seems—at least in pockets across the country.
