Q1 2026 office market breakdown: U.S. office vacancy hit 21%, a record high and four full points above pandemic lows.

Simultaneously, tenants signed 120 million square feet of new leases - a 25% jump over Q1 2025 and the highest single quarter since mid-2018. This episode breaks down the paradox. The leasing surge wasn't driven by blockbuster deals but by an unusually high number of smaller transactions. Average new lease sizes remain 15% below pre-pandemic norms. Tenants are taking less space, committing to shorter terms, and moving into spec suites. This is flight to quality playing out in real time. Financial services firms are propping up stronger markets. Charlotte and New York both posted leasing volumes above pre-2020 averages. San Francisco is getting a lift from AI-driven tech leasing. But the ceiling is coming into view. Return-to-office movement may be approaching its peak. Job growth remains tepid. Rising energy costs are creating demand-side headwinds. For owners of high-quality, amenitized products in the right markets - Charlotte, New York, San Francisco, Orange County, Dallas - the demand signal is real. For everyone else, rising vacancy and expiring leases are still the story.

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CREIC | Commercial Real Estate Investment Conference
Miami | November 6-7, 2026
500 seats. Free general admission. Spots are limited.
creicmiami.com