Momentum in the office segment continues to build, with the first positive post-pandemic absorption in the second quarter of 2024 followed by increasing absorption during the third and fourth quarters.

Absorption was 11.4 million square feet in the second quarter, 26 million square feet in the third quarter and 29 million square feet in the fourth quarter, according to Marcus & Millichap national director of research and advisory services John Chang. This performance drove the national office vacancy rate down by 40 basis points (bps) to 16.7%. Vacancy reached a record high during the first quarter of 2024 at 17.1%, up from 12.2% at the end of 2019.

“I believe the momentum will carry through 2025,” predicted Chang. “More and more companies are instituting back-to-work policies ranging from requiring employees to be in the office five days a week – like Amazon and numerous financial institutions – to more stringently enforced hybrid policies. Yes, many companies still offer broad flexibility, and some have shifted to full-time remote work for all employees, but the trend has shifted and is showing up in the office-based demand metrics.”