Office Trends Shaping 2026 — Vacancy Rates & Market Stabilization Outlook
For the past several years, the office market narrative has been consistent: vacancy rates are high and still rising. But as we look ahead, that story is beginning to shift.
As a follow-on in our Office Market Drivers & Trends Shaping 2026: Top Priorities for Today’s Tenants series, we break down the key trends influencing office strategy this year — and in this installment, we focus on vacancy remaining elevated across most major markets, with the early indicators of market stabilization emerging.
In this video, CBIZ Gibraltar’s Steve Joseph addresses the Vacancy Rates & Market Stabilization Outlook that is driven by changes in supply, demand, and tenant behavior.
The Current Reality
In many markets, vacancy is still sitting near historic highs. For example, in Chicago’s central business district, vacancy has hovered between 25% and 27% for several years. Suburban markets are facing even more pressure, with vacancy rates north of 30% in some areas.
While there has been some positive absorption, it has been gradual. Demand has not returned in a way that meaningfully compresses vacancy — at least not yet. The result is a market that remains firmly tenant-favorable, but also increasingly segmented.
Signs that Stabilization is Emerging
Despite continued elevated vacancy, several factors are beginning to shift the trajectory of the market.
Obsolete Space Is Coming Out of the System: A growing portion of older, underperforming buildings is no longer competitive. Whether through conversions, repositioning, or functional obsolescence, this space is effectively being removed from the market — reducing overall supply and helping ease long-term vacancy pressure.
Leasing Activity Is Gradually Returning: While not a surge, leasing momentum is improving. Many tenants delayed decisions over the past few years. Now, those requirements are beginning to move forward — often in the form of renewals, relocations, or consolidations into smaller footprints. This measured return of demand is contributing to early signs of stabilization.
Flight to Quality Is Driving Absorption: As mentioned in our last video, high-quality, well-located buildings with strong ownership and amenities are seeing more consistent leasing activity and, in some cases, positive absorption. Meanwhile, outdated properties continue to struggle. This dynamic is creating a bifurcated market, where stabilization begins at the top before working its way through the broader inventory.
New Supply Is Limited: New office construction has slowed dramatically. With financing constraints and uncertain demand, very little new inventory is being delivered. Over time, this lack of new supply helps rebalance the market, particularly as older space exits the system.
Looking Ahead at the Office Market
On a national level, forecasts point toward gradual stabilization by late 2026 and into 2027 as demand broadens. However, recovery will not be uniform. Stronger buildings and submarkets are likely to stabilize first, while weaker submarkets and outdated buildings may continue to struggle. In fact, suburban markets with elevated vacancy may take longer to rebalance. The future office market will likely be smaller, higher quality, and more performance-driven than it was pre-2020.
What This Means for Office Tenants
For tenants, this environment still presents meaningful opportunity — but not indefinitely.
Leverage still exists with vacancy rates still elevated, landlords remain competitive. Tenants can often secure favorable rental rates, tenant improvement allowances, free rent and other concessions, and more flexible lease structures.
As stabilization takes hold, timing and strategy matters more than ever. The best opportunities are often in the most competitive assets, which are also the first to tighten as demand returns. Tenants that wait too long or approach decisions without a clear strategy may lose negotiating power.
A Strategic Approach Going Forward
Even in a tenant-favorable market, outcomes are driven by preparation and positioning — not just timing. Successful tenants are taking a proactive and structured approach, in this environment; starting 18-24 months in advance, evaluating renewal-vs-relocation, and sourcing of multiple options to drive competition. The priority will continue to lean toward flexible workspace and total occupancy cost, not just rent.
CBIZ Gibraltar works exclusively on behalf of tenants, helping organizations evaluate market conditions, create negotiating leverage, and structure real estate decisions that align with long-term business goals.
Watch this video for additional perspective from our team, and stay tuned for the next installment in our series as we continue unpacking the trends shaping tenant strategy in 2026.