The US office sector is in "uncharted territory," according to a sector report from Colliers, as debate rages on about the future and importance of physical office space to companies and employees alike.

"The office sector is facing a set of challenges that could result in significant structural shifts over the years ahead," the report notes. As of Q2, the US office vacancy rate is 15.1%, "comfortably below" the record peak of 16.3%, while net absorption, was positive in over half (53%) of the office markets the firm tracked in its national survey in the second quarter. National office absorption totaled 3.1 million square feet and has been positive in three of the past four quarters starting in Q3 2021, the report notes.

In addition, "tenants continue to show a clear preference for the best quality space," Colliers experts say. Class A absorption in the second quarter totaled 5.6 million square feet, whereas the combined amount for Class B and C space was negative 2.5 million square feet. Chicago was the hardest hit large metro with 997,000 square feet of negative absorption in the second quarter, while the so-called "bifurcation of the San Francisco Bay Area" continues, with second quarter net absorption negative 505,000 square feet in the City of San Francisco and up 707.000 sf in Silicon Valley.