From CNBC: 2025-06-02 12:17:00

The U.S. office market is experiencing a shift with more office space being removed than added for the first time in 25 years, according to CBRE Group. 23.3 million square feet of space will be demolished or converted, while only 12.7 million square feet of new space will be constructed across 58 markets.

This reduction in office space is driven by the rise of remote work culture during the pandemic, which led to record-high office vacancies. However, the market is showing signs of recovery as more employees return to the office and leasing activity increases by 18% in the first quarter of this year.

With decreasing supply and rising demand, office rents are expected to stabilize. Prime office locations and Class A spaces are already seeing rent recovery, benefiting major office REITs like Vornado, BXP, Alexandria Real Estate Equities, and SL Green.

Developers are preparing to convert an additional 85 million square feet of office space in the coming years. Since 2016, office conversions have produced around 33,000 apartments and condos, with 43,500 more units in the pipeline. However, challenges such as dwindling ideal buildings and high construction costs may slow down the conversion trend.



Read more at CNBC: More office space is being removed than added this year