Office Real Estate Market Stabilizes as Hughes Marino Reports 42% of Major U.S. Markets Show Declining Availability

The office real estate market has reached a stabilization point after years of pandemic-driven disruption, according to a new market analysis from Hughes Marino. The commercial real estate advisory firm reports that the office market has normalized, with 42% of major U.S. metro areas now showing declining availability rates compared to the previous year.

The firm's analysis examined availability rates across major U.S. metropolitan markets for January 2024, 2025, and 2026, revealing that 42% of metro areas show declines in availability, 42% show equilibrium, and only 16% show continued deterioration. In most office markets, the majority of pre-2020 leases have expired, allowing tenants to resize and reset their footprint to accommodate hybrid and remote work specifications.

San Francisco and San Jose Lead Office Real Estate Recovery

The strongest recovery in office real estate occurred in San Francisco and San Jose, with availability rates declining by 4% and 2.6% respectively over the past year. Hughes Marino attributes this improvement to growth in artificial intelligence and the broader technology job market.

New York and Charlotte each recorded 2-point improvements in availability rates, as financial services companies increasingly demand that employees return to office settings. Atlanta and Phoenix also demonstrated gains, with availability declining by 1.2% and 1.5% respectively over the last year.

Challenges Continue in Select Markets

Despite the overall stabilization, certain markets continue to face challenges. Los Angeles continues to experience difficulties, with job losses in the entertainment industry and supporting sectors contributing to relatively high unemployment. Combined with lengthy commutes averaging over an hour, many companies have adopted hybrid work models with significant numbers of remote workers, enabling further space reductions at lease expiration.

Boston has seen a significant spike in availability as one of the few metro areas where biotech wet lab space availability is combined with traditional office space metrics. An oversupply of new construction and wet lab space returned to market by biotech companies through subleases or downsizing has increased office availability substantially. Salt Lake City increased by a full percentage point over the past year as the market adjusts to post-pandemic realities.

Long-Term Market Outlook

While there are still some large longer-term leases set to expire in the next 2-4 years that are likely to produce further corporate square footage reductions, Hughes Marino notes these downsizings will be spread over time and will likely not add material inventory to the market at any single point.

Many metro areas remain essentially flat, with companies renewing their leases at current locations. The current challenge in these stagnant office markets is that the total amount of square footage now available is at historic levels. While percentage availability rate spikes of this magnitude have occurred before in U.S. markets, these current percentages represent a much larger base of inventory.

Market Normalization Provides Clarity

With the office real estate market having normalized, both tenants and landlords can now assess future conditions with greater clarity. Hughes Marino's analysis suggests that the office market has reached an inflection point, with recovery underway in technology and financial services hubs while entertainment and biotech-dependent markets continue to adjust.