Key Takeaways

  • CBRE's quarterly office report released last week showed that the office vacancy rate fell 30 basis points to 18.3% in the second quarter, the largest quarterly decline since 2015.
  • Leasing activity rose 16% year-over-year to 62.4 million square feet; cumulative activity over the past 12 months reached 243 million square feet, up 4% from the previous period. CBRE expects leasing activity this year to exceed the all-time record set in 2022.
  • Despite accelerating demand, CBRE noted in its 2026 Americas Office Tenant Sentiment Survey, released concurrently, that companies remain cautious about the quantity, quality, and location of space.

In-Depth Insights

For the third consecutive year, a majority of companies plan to maintain or expand their office space over the next three years, CBRE said, signaling that tenant sentiment has stabilized. The real estate firm stated that hybrid work is "here to stay."

Technology companies are a significant driver of demand, particularly in top gateway markets. The report noted that this demand is offsetting continued downsizing by large enterprises, although the pace of such downsizing has slowed compared to previous years.

Another demand signal is that peak and average office usage rates have both increased, according to CBRE's workplace report released last month. Office usage rates are now above pre-pandemic averages, driven by a rise in the share of companies with in-office mandates—which doubled to 37% in 2025, though enforcement remains lax.

The tenant sentiment survey showed that nearly 90% of employers require employees to be in the office at least three days a week, up from 78% in 2025, but actual attendance has not reached that level. Employees averaged 2.9 days per week in the office in 2026, up slightly from 2.8 days in 2025, still below the employer average expectation of 3.2 days.

CBRE pointed out that one factor behind this gap may be underinvestment in the workplace. Although survey respondents generally cited colleague interaction as a driver of attendance, more than half said employees raised objections about inconvenient locations or a lack of amenities.

47% of companies believe the office experience they provide to employees is inadequate, and only 14% said they are pursuing meaningful upgrades. CBRE noted that despite falling short of expectations, corporate office spending per employee on a real-value basis remains below pre-pandemic levels, "even as employee wages and company revenues have both grown. As a result, many companies occupy office space that does not meet business needs."

CBRE noted that companies are caught between two opposing office agendas: optimizing space and enhancing the employee experience. Space optimization emphasizes "doing more with less," while enhancing the employee experience requires real investment. CBRE warned that without properly balancing the two, "the risks are significant: office space will remain expensive but undifferentiated, mandatory but unattractive, occupied but inefficient."

This conflicting agenda may become unsustainable as corporate real estate teams address priorities such as AI adoption and digital transformation.

CBRE's occupancy report showed that 23% of companies have incorporated AI into space planning decisions, and 30% expect AI to have a significant impact within the next two years. Half of tenants expect AI adoption to drive a shift toward multifunctional, reconfigurable spaces, and 36% expect AI to prompt companies to offer higher-quality amenities and experiences to attract talent.

About one-third of respondents believe AI will lead to reductions in headcount and total space, but CBRE said it is not yet clear how occupancy demand will change. The firm believes AI is "more likely to increase demand for premium space rather than reduce space."

In the near term, AI makes it difficult for companies to predict the amount of office space they need. A Censuswide survey of 1,000 executives, all CEOs or CFOs, showed that 73% of respondents believe technological changes, including AI, make companies more reluctant to commit to long-term leases or traditional real estate solutions. In that survey, 99.8% of respondents said they are actively shifting real estate costs from fixed to variable. This corroborates CBRE's report: flexibility has become a "core priority" for tenants navigating economic uncertainty, changing usage patterns, and the unknown impact of AI.

CBRE noted that the flexibility mechanisms tenants expect—such as expansion and contraction rights, termination clauses, and shorter lease terms—are largely embedded in traditional leases, and coworking is also emerging as a way to enhance tenant flexibility. Therefore, the firm said office landlords that incorporate flexibility into their standard offerings "are more likely to retain tenants and attract new ones."