Office Vacancy Falls In More Than Half Of Major U.S. Cities
It’s not just New York and California — the office market is getting healthier across the country.
National office vacancy rates declined 10 basis points in the second quarter, with more than half of the 92 markets tracked by Cushman & Wakefield notching a dip in vacancy rates. The second-quarter results reinforced an uptick at the start of the year that has been building despite macroeconomic volatility.
Vacancy has declined for two consecutive quarters as tenants fill the highest-quality buildings, leading some demand to trickle into the Class-A tier as the worst office space is being taken out of commission, with more than 90,000 apartments in the office-to-residential conversion pipeline.
"The first half of 2026 reinforced that the office recovery is no longer confined to a handful of leading markets or trophy assets," David Smith, the head of Americas insights at Cushman & Wakefield, said in a statement.
Vacancy declined in 49 of the 92 markets tracked by Cushman, or 53% of cities. Tech firms building artificial intelligence tools continue to drive leasing activity, and the best-performing markets continue to be tech-centric hubs. San Francisco, Orange County and Midtown Manhattan recorded the largest year-over-year declines in vacancy, according to Cushman.
Other areas around New York City are well represented in the top 20 markets for vacancy declines, joined by secondary markets including Kansas City, Missouri; Charlotte; Jacksonville, Florida; Austin; and others. Many of the markets are bouncing back from cyclical vacancy highs, with San Francisco gaining 364 basis points of occupancy but leaving overall vacancy elevated at 30%.
The wide representation of markets seeing vacancy dips suggests that office leasing activity is more broad-based and not solely reliant with tech tenants.
Total U.S. office inventory also contracted by 33M SF over the past five quarters, and 20 markets have had at least 1% of their office space taken off the market, as more conversions are proposed.
Among markets moving in the other direction, vacancy climbed the most year-over-year in Cleveland, although the city’s vacancy rate is below the national average of 20.1%.
Boston, Oklahoma City, Puget Sound’s Eastside outside Seattle and Los Angeles’ central business district round out the five markets where vacancy has grown the most year-over-year. Boston’s vacancy rate is still below the national average, and neighborhoods outside Downtown Los Angeles have seen vacancy plateau over the last three quarters.
Tenants vacated a net 300K SF of space during the second quarter, but absorption for the rolling 12 quarters totaled 14.3M SF after revisions to previous quarters’ totals pushed move-ins higher and suggest that this quarter’s total could also shift upward.
Sublease availability has also declined 15% year-over-year to 96M SF, its lowest point since early 2021, and continuing a downward trend that Cushman says historically precedes a broader market recovery.
More conversions will be announced, helping support gradual occupancy improvement across the sector as it benefits from healthier supply-side dynamics, Smith said.
