After several troubling years of increases, office vacancy rates across the country in 2025 finally began to see a decline, according to a just-released report.
The national vacancy rate peaked in March of last year, says the Yardi Matrix’s National Office Report, with New York soon seeing the most significant drop. “Recently, other markets have begun to follow suit,” notes the report, with the peak vacancy rates of late 2024 and early 2025 quickly falling in the months to follow.
“It is unclear how far vacancy will drop,” continues the report, “but it is unlikely ever to approach pre-Covid levels. The relationship between workers and the office has fundamentally changed, and only another seismic shift on the scale of Covid will alter that.”
The office vacancy rate in the West has been particularly uneven, with Phoenix showing a 17% rate, while Denver has seen a rate of around 23.5%.
Along the West coast, Seattle has posted a 27.2% rate, while Portland’s rate has come in at 21.3%. Heading south, San Francisco revealed a 25.2% rate, even as the Los Angeles rate shrunk to just under 15%.
The impact of coworking, meanwhile, has become an important presence in the market: “Coworking has proven to be a competitive alternative to traditional office spaces.”
This factor, continues the report, “presents an opportunity for owners of underperforming assets to attract tenants that have been underserved by the traditional model and to fill spaces that have struggled to remain occupied in recent years.”
Even as the market shifts in response to these varied conditions, the pace of new construction remains vibrant, with nearly 31 million square feet currently under construction. That total includes just under 824,000 square feet in Phoenix, and 604,000 square feet in Denver.
January 23, 2026
By Garry Boulard
Photo courtesy of Pixabay
