MARKET UPDATE
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ColdwellBankerCommercialCBS
Our organization strategically combines a powerful national presence with the agility of a regional market innovator. Coldwell Banker Commercial CBS has the resources and insight to understand our local market and the expertise to convert this knowledge into tangible value for each client. Our professionals stand ready to help clients discover untapped Commercial Real Estate market opportunities and to deliver a range of services designed to add value to their businesses. Our professionals service a wealth of business categories, with clients representing established corporations to small businesses to individual investors.
U.S. Office Market Q1 2025:
Leasing Surges, But Vacancy Still Looms
The U.S. office market showed promising signs of recovery during Q1, with increased leasing activity and renewed investor interest signaling a potential turnaround. However, high vacancy rates and economic uncertainties continue to diminish a full rebound.
Leasing activity surged, reaching 115 million square feet of office space leased in Q1 2025 the highest quarterly volume since 2019. This uptick reflects growing tenant confidence, especially in prime locations. Despite this positive trend, net absorption remained negative, as more space was vacated than occupied. Contributing factors include federal lease terminations and a rise in available sublease space.
National office vacancy rates remain a concern. According to Moody's, the vacancy rate rose to 20.4% in Q1 2025, up from 19.8% in Q1 2024, highlighting the sector's struggle to adapt to hybrid work models and evolving tenant needs. However, some markets demonstrated resilience. In Manhattan, the overall availability rate fell to 17.3% the lowest since 2020 fueled by strong demand for trophy properties.
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