Office Space Is Shrinking—The Good, The Bad, and What That Means for Business Leaders
- Gregg Metcalf
- Jun 13
- 4 min read
Gregg Metcalf | Tenant Advisor | JLL Atlanta
For the first time in decades, the U.S. will lose more office space than it adds.It’s not just a headline—it’s a strategic signal.
According to CBRE, 23.3 million square feet of office space is expected to be demolished or converted in 2025, compared to just 12.7 million square feet of new construction. While vacancy remains elevated across many markets, much of that space is obsolete or misaligned with today’s business needs.
This shift isn’t inherently bad. It’s a correction, and it’s long overdue. But it’s also a wake-up call for companies who haven’t reexamined their workplace strategy in the last 24 months.
The Good: A Healthier Market Is Emerging
The net reduction in space is helping clear out a bloated and underperforming inventory. Here’s what that unlocks for companies ready to move strategically:
Outdated buildings are being removed, reducing clutter in the market and making it easier to identify quality options.Buildings with large, inefficient floorplates or outdated systems—like Chicago’s LaSalle Street corridor properties—are coming off the market. These are often unviable for modern tenants and too costly to retrofit. Their removal is clearing the way for better, more usable space.Data source: CBRE U.S. Office Conversions and Demolitions Report (2025)
Market share of best-in-class properties are growing and continue to improve, with more investment in infrastructure, wellness, ESG, and design.Look at Boston’s 888 Boylston Street or New York’s One Vanderbilt. These trophy assets—offering LEED certification, high-performance air systems, flexible layouts, and top-tier amenities—are commanding premium rents and filling up faster, even in high-vacancy markets.Data source: JLL Research – Premium Office Rents in Trophy Assets (2024)
Urban cores are being revitalized as many conversions transform older towers into multifamily housing, increasing vibrancy and local talent density.In Dallas, The Sinclair project transformed a vacant energy HQ into 239 apartments and 450K SF of modern office. In Manhattan, conversions are revitalizing once-stagnant blocks in Midtown South, drawing both residents and employers back downtown. These areas are becoming denser, safer, and more dynamic.Data source: CBRE – U.S. Office Conversion Trends Report
In short, the reset is creating a market where quality rises—and companies have more clarity on where to invest.
The Bad: Fewer Options, Higher Stakes
That said, this shift isn’t without challenges:
High-quality office options are becoming scarcer, especially in key submarkets.Atlanta’s Midtown and Buckhead submarkets, for example, have rising demand for top-tier space, but limited availability. Clients looking for Class A space with flexibility are encountering shrinking inventories.Data source: CoStar – Midtown & Buckhead Class A Vacancy Trends
Construction is slowing, due to elevated costs, financing hurdles, and a tighter development pipeline.Across major metros, from San Francisco to Charlotte, projects that were once on the boards are being shelved or delayed due to elevated construction costs, labor shortages, and high interest rates. Developers are hesitant to break ground unless pre-leased—limiting the future supply of quality space.Data source: CBRE – Office Pipeline Outlook (2025)
Lease flexibility and leverage are tightening as top-tier buildings attract early movers and anchor tenants.In places like Miami and Nashville, premium office buildings are seeing occupancy tighten—and tenants who wait too long are facing higher rents, fewer concessions, and less negotiation room. CoStar – Landlord Concession Trends by Market
The companies that delay decisions may find themselves with fewer viable options and more pressure to compromise on location, design, or lease terms.
What Smart Companies Are Doing Now
We’re in a moment where real estate decisions can directly impact business performance—positively or negatively, more than ever. The smartest companies I work with are using this shift to:
Reassess their current space Even mid-lease, they’re exploring options to right-size, renegotiate, or reposition for future growth and flexibility.
Align workplace strategy with talent and culture Space planning isn’t about square footage—it’s about how people work best. High-performing companies are building environments that reinforce culture and empower employees.
Act early to secure strategic space The best spaces go fast. Companies planning 12–36 months ahead are locking in better terms, more flexibility, and access to top-tier assets before the market tightens further.
A Case in Point: Cisco’s Office Strategy Shift
Cisco needed to reevaluate its real estate strategy in a fast-changing market. The goal: streamline their portfolio, reduce excess space, and align their office footprint with where—and how—their teams wanted to work.
We helped Cisco evaluate long-term needs across multiple business units, analyze utilization, and implement a right-sized, hybrid-ready solution. The result was was a transformation in how Cisco uses space as a strategic asset.
The outcome?
We secured the Cisco Innovation Center in Record time gaining top-of-building signage despite market standards and:
Reduced overall real estate costs
Improved space utilization and employee experience
Increased flexibility for future growth and change
Final Thought
Office space is not a static asset—it’s a tool. It impacts how people feel, collaborate, and connect with your brand. And in a market that’s evolving quickly, the companies who stay ahead of change will find themselves positioned not just with better space, but with stronger teams and clearer competitive advantages.
How to Stay Ahead
Conduct a Needs Analysis to align your real estate strategy with your business objectives.
Secure and Optimize Office Location(s), Space(s), and Lease(s).
Maximize Profitability, Recruitment, and Retention
Many companies lose millions of dollars due to lack of employee engagement, loss of top talent, and inefficient or unneeded office space.
Working with Gregg Metcalf, clients gain the insights, the analysis, and the plan to obtain the lease and office space that retains the best employees, attracts top talent, and maximizes productivity as well as profitability.
To Contact Gregg Metcalf:
email: gregg.metcalf@jll.com
mobile: 404.661.9284
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