A Newmark Executive on the Office Lease Renewal Cycle

January 5, 2026

Executive Insights Brokerage National Office

David Bitner outlines how a wave of prepandemic office leases expiring through 2027 could shape renewals, occupancy and landlord strategy.

Bitner leads global research, applying macroeconomic and market analytics to commercial real estate trends. Image courtesy of Newmark

A significant share of prepandemic office leases is set to expire over the next several years, ushering in a critical period for the U.S. office market. As these contracts roll, tenants are reassessing how much space they need—and what kind—while landlords brace for heightened competition and shifting renewal dynamics.

Commercial Property Executive spoke with David Bitner, executive managing director of global research at Newmark, about what this wave of lease expirations means for renewal behavior, tenant demand and market fundamentals, and whether early data is offering clearer signals about the office sector’s trajectory.

A Newmark report from the second quarter of 2025 estimated that roughly 1.4 billion square feet of prepandemic office leases are scheduled to expire between 2025 and 2027. How should the market interpret the scale of this upcoming rollover, and what are you seeing so far in terms of tenant behavior as those leases approach expiry?

Bitner: These metrics are based on the fixed stock of leases that were in place on the eve of the pandemic, so the distribution of the lease maturities is a fixed quantity and has not changed. The reality is, of course, more complex as some maturities underwent short-term extensions, there may have been some early terminations etc., however, we do not incorporate these potential adjustments.

The point remains that there are large quantities of prepandemic leases yet to mature and how occupiers behave at expiry is critical for the office market outlook. We have become more constructive on this potential headwind over the last several quarters as occupied square-feet-per-worker metrics have stabilized and our tenants-in-the-market data show the majority of tenants seeking the same or greater space on lease expiry.

Your third-quarter data showed net absorption turning positive, vacancy holding near 20.5 percent, leasing at 56 million square feet and sublease availability declining year-over-year. As large renewals approach, how are these conditions shaping negotiating leverage, and how does that dynamic differ between commodity space and top-tier submarkets?

Bitner: Tighter market conditions improve landlord negotiating leverage and incentivize firms to renew in place. It is difficult to call national vacancy of 20.5 percent a tight market so, on balance, this remains an occupier-friendly office market in which occupiers have multiple competitive options. Knowing this, landlords of commodity space—where availability is highest—are using every tool to retain their largest tenants and avoid significant vacancies in their buildings.

However, the office market is not a monolith. There are submarkets where trophy space availability is well under 10 percent and large blocks of space are particularly scarce. The Park Avenue submarket in Manhattan exemplifies this divergence, with trophy vacancy there hovering just under 4 percent. In such cases, we very much expect current tenants to hold onto their space and other occupiers to compete aggressively. Moreover, in these tight submarkets with very limited quality space available, landlords hold the leverage in lease negotiations and can scale back some of the more generous concession packages that were common earlier in the pandemic.

For now, tenant improvement allowances and other concessions remain common across much of the office market. How are landlords thinking about concessions versus base rents as renewals approach, and what does that mean for net effective rents?

Bitner: There is growing evidence of tenant improvements and other concessionary terms stabilizing but not for them returning to prepandemic norms. Unless we were to see a significant reduction in base rents, the concessionary terms are liable to remain significant for the foreseeable future. Indeed, I’d argue that the market rather than adjusting to the demand shock of the hybrid work transition instead held firm on base rents and needs to grow into them before concessionary terms can fall meaningfully.

Similarly, the distress cycle has been more muted than the math suggests because owners and lenders have been willing to accept lower returns over a longer period of time rather than write down and dispose of assets more aggressively. The muted distress and surprising solidity of base rents are related—landlords have been particularly reticent to reduce base rents because they impact appraisals more strongly than do an equivalent increase in concessions.

Average deal sizes have come down from prepandemic levels but appear to be stabilizing. As the renewal wave continues through 2027, where do you see footprints settling?

Bitner: We’ve seen the lease size average stabilize and are not expecting incremental declines. This is further reflected in our metrics on occupied square-feet-per-worker, which has similarly stabilized. Average weekly office utilization has also stabilized, suggesting that several indicators now point to a steady state or new normal.

Looking forward, we expect a shift towards de-densification, particularly in the trophy office space. This is already on display in Manhattan where we see a combination of very strong leasing activity despite anemic office-using job growth. I’m less sanguine about de-densification in suburban and/or Class B office markets.

As the renewal wave builds, where are you seeing the clearest differentiation between trophy, Class A and Class B assets, and how is that shaping repositioning and renovation strategies?

Bitner: I think we will continue to see greater dynamism in the Class A and above segment. Most Class B tenants, particularly in the suburbs, tend to stay put. This aligns with the cost-oriented nature of the tenants and their more utilitarian attitude towards their spaces. Quality-seeking tenants are more likely to be looking to optimize space and location quality, hence the increasing competition for trophy spaces and, over time, will manifest more in the Class A segment. Additionally, when a Class B tenant does move, we are seeing a tendency to upgrade space but not jump all the way up to trophy. Said differently, commodity Class A is the highest beta part of the office market both in terms of pricing and leasing velocity.

With the market transitioning into recovery, commodity Class A office should begin to benefit, whereas in recent years it has been the weakest portion of the market. Part of this dynamic is that in particularly tight submarkets where trophy space isn’t available, demand spills over into the next tier of building class: Class A buildings.

We also expect continued renovations among Class A assets as landlords position themselves to compete once that spillover occurs. Those owners investing in upgraded finishes, enhanced amenities and shared meeting spaces will hold a competitive advantage in attracting these tenants.

As owners look ahead to sizable lease expirations in 2026 and 2027, what proactive steps should they be taking now to protect renewals and maintain a competitive edge?

Bitner: Engage key tenants early: Understand their satisfaction with the space, offer favorable and flexible renewal options, and invest in the upgrades they value most. Think creatively outside of traditional lease terms and offerings. Avoid waiting too long to start these conversations, and don’t overlook potential OBBBA tax benefits on space buildouts and certain renovations through immediate expensing provisions as detailed in our recent paper.