2025 Biannual Office Market Report: Part One

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.

Gateway U.S. Office Markets

KEY FINDINGS

• Office-Using Hiring Demand Cools as Job Openings Decline, Even as AI Hiring Picks Up: Office employment remains stable, but a sharp drop in job openings signals cooling demand for space. At the same time, rising AI-related postings point to shifting hiring priorities not widespread displacement.
• Office Rent Recovery Remains Modest, Recently Returning to Pre-COVID Levels: CCRI shows effective rents have only exceeded 2019 levels in the past five quarters and are up just 7.8% since, pointing to a slower and more recent recovery than raw data suggests.
• Office Recovery Remains Uneven, with Select Markets Rebounding While San Francisco Continues to Lag: Dallas–Fort Worth and Boston are leading rent recovery in the index, while San Francisco and the broader Bay Area continue to trail.
• Over 30% of Office Leases Set to Expire by 2028, Creating a Critical Rollover Window: A slight majority of expiring space has positive embedded rent growth potential, with a higher share in Class B than Class A.
• Lease Term Length Recovery Remains MIXED, with Class B/C Continuing to Lag Pre-COVID Norms: While non-Prime Class A lease terms have rebounded above 2019 levels, Class B/C remains 8.5% below and has yet to recover across most markets.
• Concession Ratios Decline from Peak but Remain Elevated Across All BUILDING Classes: Incentives have slightly pulled back in recent quarters, particularly in Class A, though Class B/C trends remain more mixed across markets.
• TAMI Leasing rises to Post-COVID High, with AI Demand evident in the Bay Area: TAMI’s share of leasing posted its largest gain since 2020, with AI-driven demand more prominent in the Bay Area while NYC expansion remains broad-based across large firms.
• Post-COVID Sublease Wave Peaks in 2025, with Expirations Driving Near-Term Pricing Risk: Nearly 30% of subleases will expire through 2028 at ~25% discounts, with most tied to above-market rents, signaling potential downward pressure on re-leasing.

Office-Using Employment and Job Openings Declined Over Past 12 Months in New Headwind for the Office Sector

U.S. office-using employment declined 0.6% from 34.6 million in December 2024 to 34.4 million in December 2025. Meanwhile, job openings fell more sharply, dropping from 1.9 million to 1.4 million, a 26.8% decline over the same period to the lowest point since April 2020, in a new headwind for the office sector. Together, these patterns suggest a labor market that has cooled from earlier highs, with employment holding relatively steady even as hiring demand has softened recently.

Office Job Wage Growth Moderates Across Sectors, but Information Leads Gains

Average weekly earnings continued to rise across all three major office-using employment sectors over the past year. However, the pace of growth has been more moderate than in earlier periods. From December 2024 to December 2025, the average weekly earnings increased by about 5.7% in information, 4.4% in professional and business services, and 3.5% in financial activities. While all three sectors saw gains, the information sector recorded the fastest growth over the past year, narrowing the gap with other sectors and potentially reflecting increased investment in artificial intelligence-related roles.

As AI Adoption Surges, Employment Trends in AI-Exposed Office Roles Not Yet Clear

According to Indeed.com job posting data, the share of listings mentioning AI remains low at just 4.7%, but has increased by more than 320 basis points since mid-2020, signaling growing demand for AI-related skills. In addition, office-using occupations most exposed to potential AI-driven displacement, including Office and Administrative Support, Sales and Office, and Management, Business, and Financial Operations, are down 4.4%, 3.1%, and 1.5%, respectively, from peak levels. Sales and Office and Office and Administrative Support roles also remain below January 2019 levels, ranking among the weaker-performing groups over that period. However, on a year-over-year basis, only Sales and Office occupations declined, suggesting that while AI-exposed roles are facing pressure and may present a longer-term headwind for office demand, widespread employment disruption has not yet materialized.

Check out the full 2025 Biannual Office Market Report.