Office Report: Sales Momentum Extends, Pipeline Contracts

Office pricing turned a corner in 2025, according to the latest Yardi Matrix national office report. The average sale price rose 6.1 percent last year—the first increase since the 2021 peak—finally reaching the bottom at $182 per square foot.

However, even with this rebound, pricing still remained 32.7 percent below from pre-pandemic levels: in 2019, assets sold at an $271 per square foot average. Prices across most metros found the floor starting from 2024, paving the way for recovery and stabilization in the sector.

When looking at metro level, only four of the top 25 U.S. markets recorded pricing numbers higher than their pre-Covid values. These metros are Miami (20 percent), Dallas (8.5 percent), Detroit (8.4 percent) and Orlando (5.8 percent). Even so, 2025 marked a notable improvement as prices increased compared to the year prior.

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Prices for Class A and A+ assets also reversed course last year and recorded a 7.5 percent increase from 2024 figures. When looking at their location, CBD properties rose 13 percent in 2025, while urban properties outside of CBDs sold at 16.5 percent less.

Discounted transactions started to fall, but remain widespread. In 2025, nearly 45 percent of all office sales traded below the prior sale prices—slightly down from the surge in bargain deals from a year earlier. Even with that drop, the overall volume of discounted sales actually increased, since the investment activity picked up pace—signaling a sustained demand for underperforming offices that were just as desirable at a discount as high-quality office properties.

The national office vacancy rate stood at 18.2 percent as of January 2026—down 20 basis points from the prior month and 150 basis point year-over-year. Despite notable decreases in vacancies, several metros still posted elevated levels, particularly tech-heavy markets where companies leveraged remote work to their benefit. Seattle office space recorded the highest vacancy rate in January at 27 percent, followed by Austin at 26.4 percent and San Francisco’s 24.7 percent.

The steepest year-over-year vacancy improvements nationwide were recorded in San Francisco (-460 basis points), Houston (-380 basis points) and Manhattan (-350 basis points). On the opposite end, the metro with the highest year-over-year increase was Orlando (290 basis points).

Asking rents continued to show modest improvement in January. The national average full-service equivalent listing rate reached $32.55 per square foot—down 31 cents from the prior month and 2.5 percent year-over-year.

Development slowdown to continue, office pricing recovers

Developers continued to pull back on new office projects in the first month of 2026. The national pipeline fell at roughly 29 million square feet under construction in January, representing 0.4 percent of the existing inventory and marking a 6.4 percent decline from the prior month. Compared to January 2025—when the sector had nearly 51 million square feet underway—construction activity hit a nearly 43 percent year-over-year decline.

Construction starts remained historically muted. Developers broke ground on only 13.8 million square feet over the past 12 months—an 18.5 percent increase from the prior 12-month period. Even so, the shrinking supply pipeline will unlikely recover as office starts continue to remain near historic lows.

The office sector saw 121 transactions in January, with assets selling at $278 per square foot and generating a total dollar volume of $4 billion.

Manhattan stood out in 2025, where investors closed 73 transactions, marking the highest sales number of the decade. Office assets in the borough sold at $495 per square foot last year— 21.5 percent higher year-over-year. The pricing momentum in Manhattan will likely continue through 2026.

In January alone, Manhattan recorded $1.3 billion in office deals—the highest dollar volume nationwide—with properties selling at $760 per square foot. A recent sale showing this trend is SL Green Realty’s $730 million purchase of Park Avenue Tower, a transaction closed in January. The sale price was at a modest 7.5 percent discount when compared to the tower’s previous sale from 2014.

Read the full Yardi Matrix office report.