In keeping with a trend observed in 2025, the national office market showed continued signs of stabilization in February. Overall vacancy rates rested at 17.6% last month, marking an annual decrease of 200 basis points, according to a report released Thursday by CommercialCafe.
This improvement in occupancy is heavily supported by a dwindling national supply pipeline, which currently sits at more than 28 million square feet under construction. The tightening vacancy rate is also aided by a growing trend of decommissioning underused spaces and converting office properties into multifamily housing.
Despite the improved occupancy metrics, the national average full-service equivalent listing rate experienced a slight yearly dip of nearly 2%, settling at $32.79 per square foot in February.
Transaction volumes and property values remain highly regionalized across the country. Manhattan continues to dominate the national landscape, tallying more than $1.6 billion in sales closed since the start of the year to land significantly ahead of any other U.S. market.
Trailing behind the New York borough — and the San Francisco Bay Area’s $680 million — is Miami, which recorded $666 million in transactions. The South Florida hub appears on track to post its highest quarterly sales volume since 2020, with office sales averaging $365 per square foot last year, a 20% increase from 2019 prices.
On the leasing front, Western and Northeastern markets generally maintained asking rates above the national average, while the Midwest and South offered greater affordability.
San Francisco commanded the highest regional asking rates at nearly $63 per square foot, almost double the national average, even as its vacancy rate remained elevated at 24.2%. Conversely, Detroit offered the most accessible asking rents among top Midwestern markets, averaging less than $22 per square foot.
In the development sector, the post-pandemic life sciences boom is beginning to recalibrate. Nationwide, new construction starts for life sciences dropped from a peak of 15.4 million square feet in 2022 to just 2.4 million in 2025.
“Life sciences development overextended a bit coming out of COVID,” commented Peter Kolaczynski, director of Yardi Research, in the report. However, he added that the slowdown in new construction creates an opportunity for the market to absorb the current oversupply of freshly delivered spaces in the coming decade.
Overall, general office construction remains concentrated in a few key metros. Boston, Manhattan, Dallas and Los Angeles served as the only markets with more than 2 million square feet of new office space underway last month.
