US office vacancy falls in over half of major markets

The US office recovery widened in the second quarter, with vacancy declining in 49 of the 92 markets tracked by Cushman & Wakefield — more than half — as the rebound reached beyond the coastal trophy towers that led it.

The national vacancy rate held at 20.1%, edging down 10 basis points on the quarter. Sublease availability, a closely watched gauge of tenant retrenchment, fell 15% year-over-year to 96 million square feet, and the market has now logged positive absorption on a rolling 12-quarter basis of 14.3 million square feet. Landlords have also pulled roughly 33 million square feet of obsolete space off the market over five quarters through demolition and conversion, tightening supply.

Why it matters. For most of the post-pandemic period, occupancy gains clustered in a handful of trophy buildings while everything else languished. A broad-based improvement — showing up in secondary markets like Kansas City, Charlotte, Jacksonville and Austin alongside Midtown Manhattan and Orange County — is a more durable signal for a sector still carrying heavy vacancy.

The numbers. San Francisco, still at about 30% vacancy, nonetheless posted a 364-basis-point occupancy gain, among the sharpest turnarounds. “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.

What’s next. With sublease space shrinking and obsolete inventory coming offline, the supply overhang that has defined the downturn is slowly easing — though at 20.1%, national vacancy leaves the recovery years from complete.