The office sector in the 25 largest U.S. markets showed renewed strength in July as vacancy rates dropped, the construction pipeline slowed and listing rates were on the rise, according to a report from CommercialCafe.

The commercial real estate marketplace firm found that the national office vacancy rate in July stood at 17.7%, down 130 basis points from one year ago and a decrease of 70 bps from December. According to CommercialCafe, 19 of the 25 largest markets in the country saw year-over-year decreases in vacancy rates.

Detroit had the largest one-year drop in vacancy rates, falling 630 bps to 18.3%. Manhattan and Dallas were next with a 420 bps drop. Manhattan’s vacancy rate was at 10.2% in July, while Dallas was at 18.7%.

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While San Francisco has seen sky-high sales prices for office space, the city still suffers from the highest vacancy rate among the top 25 markets at 26%. It was followed by Seattle at 24.9% and Austin, Texas, at 24.5%. Houston came in fourth at 24.1%. 

Despite high vacancy rates, the national average full-service equivalent listing rate for office space rose to $33.58 per square foot, a 2.6% increase from one year ago and up from the average of $32.86 per square foot in December.

Los Angeles experienced a 16.3% increase — the highest in the report — in listing rates during the past year to $47.79. The San Francisco Bay Area was second, with a 9.2% increase to $56.27.

Slowing commercial pipeline

One reason for the improved vacancy rates and higher listing rates is that the construction pipeline continues to slow. At the start of 2026, there were nearly 31 million square feet of office space under construction in the top 25 markets, according to CommercialCafe. As of July, about 29.5 million square feet of office space were under construction, and developers had delivered 13.1 million square feet of new office space to customers.

Boston has 3.4 million square feet of office space under construction, the most of any city in the report. The Manhattan borough of New York City was second with 2.9 million square feet, and Dallas was third with 2.82 million square feet. The three cities accounted for nearly 31% of the national pipeline total in July.

There has also been a strong market for acquiring office space this year, with more than $36 billion spent on 1,576 transactions. Sales prices have averaged $198 per square foot. Eighteen of the top 25 metros saw overall sales exceed $500 million so far this year, with 10 markets each topping more than $1 billion.

Manhattan led the way, with nearly $5.2 billion in sales this year. It was followed by Dallas, with $2.9 billion; the Bay Area with $2.6 billion; and San Francisco with nearly $2.6 billion.

San Francisco enjoyed a major comeback in 2026 as sale prices increased to $543 per square foot last month. CommercialCafe writes that the news comes after three years of historical lows. However, the rates were still about half of the average of $1,060 per square foot that the city’s properties could fetch during the market peak in 2020.

Another positive trend was in care-associated office properties. They are doing considerably better than general office buildings, and their success is expected to continue while traditional office space experiences more restructuring and consolidation.

As general office development declined in recent years, medical office properties enjoyed newfound economic muscle. Last year, medical office space completions accounted for more than 7 million square feet, or nearly 17% of total office completions. Medical office starts accounted for 26.2% of the total office supply pipeline.