The pandemic is now just a thing of the past for many office landlords and commercial real estate services firms, with leasing and sales demand officially meeting or surpassing 2019 levels.
Executives behind some of the largest landlords and brokerages in the United States say the office market has rounded an important corner, pushing some firms into record dealmaking territory after years of lower demand as a result of the health crisis that upended the industry more than half a decade ago.
"Even if you're outpacing the rest of the market, it's very, very hard to always be swimming upstream," Mark Lammas, president of office property owner Hudson Pacific Properties, told CoStar News. "Now we're not swimming upstream anymore. Things have clearly turned around."
Hudson Pacific is on track for one of its strongest years of leasing, ever. CBRE — the world's largest commercial services firm — and rival Cushman & Wakefield both posted the highest third-quarter leasing revenue in their history, driven by increases in U.S. office deals. JLL posted its seventh straight quarter of office revenue increases in the U.S., while Marcus & Millichap — the sixth-largest commercial services firm with a brokerage — posted its first quarterly profit of the year.
All told, the five largest commercial real estate services firms now expect record or near-record profits in 2025 — just two years after the firms were in cost-cutting mode during the steepest real estate downturn since the Great Recession.
It's a pattern expected to hold as the market moves into 2026, said CBRE Chair and CEO Bob Sulentic, especially as demand in smaller markets builds alongside that in large, gateway cities such as New York and San Francisco.
COVID-19 "is so far in the rearview mirror,” Sulentic said during a recent earnings call.
Outperforming the headwinds
The turnaround is by no means complete. The nation's office vacancy rate remains stuck at a record high of 14%.
But that figure may have finally hit its peak, according to CoStar research. While U.S. office leasing has yet to fully recover to pre-pandemic levels, the 12 million square feet of deals signed in the quarter ended Sept. 30 is the most since 2019.
Lagging occupancy rates have been a sticking point for some of the nation's largest landlords in recent years, as a number have scrambled to backfill large blocks of space that tenants ditched in the early years of the pandemic.
Yet since the beginning of the year, the uptick in leasing momentum is finally beginning to close the gulf between occupied and leased rates.
Several things are working in favor of landlords and brokerages. Compared to two years ago, more employees are in the office, and technology firms — specifically those within the artificial intelligence slice of the industry — have headlined a number of blockbuster leases signed in recent months. Other companies are signing on for more space, for longer terms.
Headwinds remain, including uncertainty about higher tariffs, slowing job growth and still-high interest rates. But industry analysts say rising office strength is driving the real estate services sector’s recovery.
“Headwinds in capital markets and leasing are quickly abating, which could support upside to our estimates into 2026,” Stephen Sheldon, a William Blair equity analyst who tracks the commercial property sector, said in an investor note.
CBRE, JLL, Cushman & Wakefield, Colliers and Newmark reported double-digit gains in office leasing and property sales in the third quarter. Those deals are bolstered by "tenants growing more comfortable signing longer-term commitments after tariff-related uncertainty in the first half," Blair said.
Returning to an office landlord's market
Adding to the optimism is a historically barren office construction pipeline, meaning competition for space is heating up as inventory gradually melts away.
"In a typical cycle you usually have to compete with more inventory that's been added through new development or new supply, but that's not the case here," Hudson's Lammas said.
The national office market has added just 8 million square feet since the beginning of 2025, according to CoStar data, a figure on track to set a record low in terms of annual net completions. That bar was last set in 2011 with a total of 18 million square feet.
"With no new construction and demand now accelerating, there's a shortage in some of our markets that is absolutely coming and, in some cases, almost here," Colin Connolly, CEO of Sun Belt-focused landlord Cousins Properties, recently told analysts.
The United States' office market is now expected to report an occupancy boost of about 10 million square feet over the next year, CoStar analysts predict, a turnaround from the 4 million square feet the market was initially expected to lose in occupancy over the same time.
"Most major companies are phasing out remote work, office fundamentals are improving, demand is growing and net absorption has finally reached a post-pandemic high," Connolly added. "We're relatively close to an inflection point where it is likely to become a landlord's market."
Brokerage boost
Tenants are signing bigger leases in more cities as demand for high-quality office space has pushed companies to look in second- and third-tier markets.
Strengthened demand in gateway markets has bolstered growth for brokerages, with CBRE's Sulentic saying that the firm’s expectation for 2026 is more "broad-based growth."
The recovery in the office sector "is clearly broadening” as more employers require workers to be at their offices, Marcus & Millichap CEO Hessam Nadji told analysts.
Average daily office attendance has returned to 80% of pre-pandemic levels, he added, up from 57% last year and far beyond the 50% reported in 2023.
CBRE's Sulentic said executives don’t talk about the return to offices but rather the return of office space to its historical place as the top commercial property asset.
“All the arguments pro and con on office space have kind of disappeared,” he said.