An acceleration in office leasing activity is coinciding with a slowdown in deliveries, which is creating a spillover demand in which broader segments of the market are beginning to stabilize and grow, according to JLL’s recent office market dynamics report.

Newer building supply peaked in 2022 with more than 100 million square feet across the country but has declined 25% since then. The buildings that are most competitive with newer supply have benefited from increased demand, including buildings that have been renovated in the past decade and historical buildings with unique features or architectural significance, said the report. Highly amenitized buildings in central business district markets gained nearly 2 million square feet of occupancy in 2024 regardless of their age. Availability in mixed-use neighborhoods and transit-oriented notes also has been on the decline.

The trend is expected to persist as office development continues to slow, with just over 500,000 square feet of construction breaking ground in Q4. Most new projects are small-scale, pre-committed developments, said JLL. Nearly 30 million square feet delivered in 2024, and that figure is expected to drop by 20% in 2025 and by almost 75% in 2026 and 2027.