2025 Biannual Office Market Report: Part Four

CompStak analyzed 11 major U.S. gateway office markets using lease-level data and the Columbia CompStak Rent Index. The latest data through Q4 2025 shows an office sector in the middle of a slow, uneven recovery, with sharp divergence across markets, asset classes, and tenant types. Check out the full insights in the 2025 Biannual Office Market Report.

Leasing Concessions Pull Back Most for Non-Prime Class A, but All Segments Are Down from Peak

While concession ratios remain elevated relative to historical norms, they declined over the past two quarters for both Prime Class A and non-Prime Class A space. Class B/C trends have been more mixed, though concession ratios across all three segments remain below their previous peaks.

Class B/C space has seen the largest decline from peak levels and continues to post the lowest overall concession ratios, despite a small year-over-year increase.

Across the 11 markets analyzed, Washington, D.C. and Chicago recorded the highest average concession ratios in 2025, while San Francisco and New York City posted the largest basis point jumps since 2019.

TAMI Leasing Hits Post-COVID High across Major Markets

According to CompStak data, TAMI (Technology, Advertising, Media, and Information) posted its largest year-over-year gain in office leasing share in the data set tracked and it ranked as the second-largest industry by share in 2025. This increase was driven by multiple markets, led by New York City, with additional gains in Greater Los Angeles and the Bay Area. While San Francisco recorded only modest growth in 2025, early 2026 activity signals potential acceleration ahead after Anthropic’s 420,000-square-foot lease at 300 Howard Street in late January. The composition of TAMI demand varies by market. In New York City, leasing was driven primarily by large, diversified firms such as Salesforce, Moody’s, Apple, Amazon, and IBM. While not AI-native, several are hyperscalers and key players in AI infrastructure, indicating AI demand is present but may be embedded within broader leasing activity. By contrast, the Bay Area shows a higher concentration of AI-driven demand, with more than 44% of TAMI leasing attributed to AI-focused firms, including Databricks’ 305,429-square-foot lease in Sunnyvale.

Post-COVID Sublease Wave Peaked in 2025, with Significant Near-Term Expirations and Embedded Rent Risk Through 2028

Subleases signed since 2020 saw expirations peak in 2025, with nearly 30% set to roll between 2026 and 2028. These subleases were executed at a steep discount, with sublessees in active leases expiring through 2028 paying about 25% below the sublessor’s in-place rent, underscoring the tenant-favorable leasing environment in recent years.

Looking ahead, 63% of expiring subleases are tied to sublessors paying above current market rents, indicating potential repricing risk for landlords as direct leases roll and, in some cases, continued downward pressure on re-leasing rents if space returns to market. At the same time, roughly one-third of expiring subleases are below market, suggesting mark-to-market upside in places, but also renewal risk if tenants face higher occupancy costs.

Office Sale Price Declines Appear to Stabilize in 2024–2025 Following Multi-Year Compression

Using select repeat sales from CompStak’s data covering office property transactions across major markets, appreciation relative to prior sale prices has compressed by approximately 1,500 basis points since 2020, shifting into negative territory by 2024. While still negative, annualized sale price declines improved by about 120 basis points in 2025, suggesting early signs of stabilization. Meanwhile, median hold periods have extended by 3.3 years since 2018, reaching a post-COVID high of 7.4 years in 2025. Office sales in 2024 and 2025 recorded median annualized declines of 5% to 6% despite hold periods exceeding seven years. Taken together, these trends suggest the office sector may be nearing the end of its repricing phase, with values stabilizing even as assets continue to trade below prior sale levels.

Check out the full 2025 Biannual Office Market Report for more insights.