NAIOP Sees 31.2 Million Square Feet of Office Absorption as 3-Quarter Demand Streak Holds
Updated
Updated · NJBIZ · May 29
NAIOP Sees 31.2 Million Square Feet of Office Absorption as 3-Quarter Demand Streak Holds
1 articles · Updated · NJBIZ · May 29
Three straight quarters of positive net absorption through Q1 2026 gave the U.S. office market its longest sustained demand growth since mid-2022, even as NAIOP said momentum slowed significantly in Q2.
NAIOP now forecasts 31.2 million square feet of net absorption over the final three quarters of 2026, assuming a 22.5% recession risk and slower economic and job growth.
Vacancy improved because obsolete office space is being removed faster than new supply is arriving, while leasing remains concentrated in higher-quality urban buildings favored by large tech and finance tenants.
Demand has still been essentially flat since Q2 2024: average quarterly net absorption over the past eight periods was negative 121,531 square feet, and less than 1 million square feet of office inventory was eliminated.
New Jersey reflects the split market—April vacancy fell to 16.1% and asking rents reached $34.58 per square foot, fourth-highest nationally—while Class A space outperforms older buildings that rely on adaptive reuse and lower costs.
With a $929B debt wall looming, are America's downtowns facing a wave of 'zombie' office towers?
Is the push for ESG creating a permanent, unrentable underclass of older, 'brown' office buildings?
Will AI's demand for premium offices outpace the jobs its own technology threatens to eliminate?