The Office Market Has Turned: 10 Questions Corporate Leaders Should Be Asking Now
- 2 days ago
- 4 min read
Updated: 18 hours ago
By Gregg Metcalf
The office market is shifting, and conditions vary significantly by city, submarket, and building. Demand is improving, excess supply is being removed, and the best space is becoming more competitive.
The Office Market Has Turned
Office vacancy has fallen at its fastest pace since 2015.
The overall office vacancy rate fell by 30 basis points (bps) in Q2 to 18.3%, the largest quarterly decline since 2015. Prime vacancy outpaced the broader market, dropping by 40 bps to 12.3%. Midtown Manhattan’s prime vacancy rate declined further to just 2.2%.
The office construction pipeline is shrinking
The under-construction pipeline fell to 15.4 million square feet—down nearly 28% from Q2 2025 and 87% from its Q2 2020 peak. Just 2.2 million square feet was completed during the quarter, contributing to the lowest first-half delivery total since CBRE began tracking the metric in 1990.
Rent growth is outpacing historical averages
Average asking rent increased by 2.6% year-over-year to $37.58 per sq. ft., the fastest pace in six years and above the 30-year average. The spread between asking and taking rents narrowed to 10.1% but remained wider than the 8.6% spread in 2019.
Top Markets by Overall Inventory – Vacancy and Leasing
The office market has shifted. Demand is improving, obsolete supply is being removed, and the best space is becoming more competitive—but the recovery remains uneven across cities, submarkets and buildings. For corporate leaders, the question is no longer whether conditions are changing. It is whether their real estate strategy is keeping pace.
The 10 Questions Leaders Should Be Asking
1. What does our workplace need to accomplish for the business?
Begin with purpose, not square footage. Is the office expected to strengthen culture, accelerate decisions, support innovation, develop talent, serve clients or unite dispersed teams? Leadership must agree on the outcomes the workplace should produce before determining what space the company needs.
2. How will our business change over the next five to ten years?
Real estate commitments often outlast strategic plans. Consider growth, contraction, acquisitions, new markets, organizational redesign and AI’s effect on roles and workflows. The goal is not perfect prediction, but avoiding a workplace designed for the company’s past.
3. What do our people need in order to perform at their best?
The CHRO’s perspective belongs at the beginning. Which work benefits from being together? What creates connection, mentorship and belonging? What makes the commute worthwhile? Attendance policies set expectations, but the workplace must give people a compelling reason to be there.
4. Are we planning around actual behavior or inherited assumptions?
Badge data, utilization studies, employee feedback and peak-day patterns often tell a different story from averages. An office can appear underused across a week yet be overcrowded on key days. Decisions should reflect how different teams work, not one companywide ratio.
5. What is the right amount and mix of space for our business?
Right-sizing is not synonymous with reducing. A company may need fewer desks but more team rooms, training areas, client space or shared amenities. The issue is whether its square footage supports the work that matters.
6. How much available space truly meets our requirements?
Vacancy rates are poor substitutes for a requirement-specific analysis. Location, talent access, building quality, ownership, floor plates, infrastructure and timing all affect the actual choices. A closer examination may reveal that suitable availability is tighter—or more favorable—than the headline suggests.
7. What are the potential benefits and risks of acting now versus waiting?
Acting now may provide access to a preferred space or greater planning certainty. Waiting may preserve flexibility, allow workplace needs to become clearer or produce better economics in an oversupplied submarket. Leaders should evaluate both sides rather than assume that either speed or delay is inherently safer.
8. Have we tested every credible alternative?
Renewal and relocation are not the only choices. Consolidation, expansion, restructuring, hub strategies, flexible space and owned-versus-leased options may produce better outcomes. Competition among alternatives also creates negotiating leverage.
9. Can the landlord deliver what is being promised?
A proposal’s economics matter only if ownership can perform. Financial capacity, debt exposure, capital plans, improvement funding and the ability to maintain amenities deserve scrutiny. The strongest concession package is not necessarily the lowest-risk deal.
10. Which financial, operational and flexibility provisions matter most to our long-term strategy?
Rent is only one component of value. Expansion and contraction rights, renewal options, termination provisions, capital improvements, expense protections and schedule certainty may matter more over time. The right priorities depend on how the business expects to grow, operate and manage uncertainty.
The office market’s recovery will not unfold evenly, and no single strategy will fit every company. For some organizations, the answers to these questions may support a relocation, consolidation or new lease. For others, they may validate a renewal, a reduction in space, greater flexibility or no immediate change at all.
The value of the questions is not that they produce a predetermined decision. It is that they help leadership make an intentional one.