The national office vacancy rate declined for the second quarter in a row in 2026, as demand reached its highest level in six years on a four-quarter rolling basis, according to a new report from Cushman & Wakefield.

The national office vacancy rate declined 10 basis points year over year to 20.1% in the second quarter. It was the eighth straight quarter in which the vacancy rate remained generally unchanged. Vacancy rates fell quarter over quarter and year over year in 49 of the 92 U.S. markets tracked by the commercial real estate firm.

The news is more evidence that the long-suffering office sector is improving in many parts of the country. While net absorption in the second quarter totaled negative 360,000 square feet, revisions to earlier quarters brought the past year’s rolling total absorption to a positive 14.3 million square feet. That marks the seventh consecutive quarter of improvement and the highest level of absorption since 2020.

“The first half of 2026 reinforced that the office recovery is no longer confined to a handful of leading markets or trophy assets,” said David Smith, head of Americas Insights at Cushman & Wakefield, in a press release.

“Demand has improved for seven consecutive quarters, vacancy is beginning to decline across more than half of the markets we track, and the amount of available sublease space continues to shrink,” Smith continued. “While the recovery remains gradual, the underlying fundamentals are moving in the right direction across a much broader segment of the U.S. office market.”

A sign of inventory declines is the reduction in sublease availability. Vacant sublease space fell 15.4% year over year to 95.6 million square feet during the second quarter, which is 28% below the level seen at the post-pandemic peak of sublease availability during the first quarter of 2024.

Available sublease space now represents 1.8% of total U.S. office inventory. Cushman & Wakefield points out that the declining availability of sublease space historically precedes improving occupancy fundamentals.

Obsolete properties also are continuing to be converted for other uses. The U.S. office inventory declined by 33 million square feet, or 0.6%, during the past five quarters, with 20 markets shrinking by at least 1% in the past year. 

At the same time, new office completions declined 24% year over year during the second quarter, reducing the one-year total to 15.6 million square feet, the lowest level since 2012. The national construction pipeline also remains limited, totaling 19.7 million square feet, or about 0.4% of total inventory.

“Looking ahead, we expect constrained new supply and a smaller inventory base to continue supporting gradual improvement across the office sector,” Smith stated. “Occupiers remain disciplined in their leasing decisions, but the market is increasingly benefiting from healthier supply-demand dynamics that should support continued recovery through the balance of 2026.”