The office market is no longer in decline — it’s in transition

Nationwide office availability stands around 23% as of Q3 2025, nearly double pre-pandemic levels. Yet the headline masks a sharply bifurcated market.

New York City is showing clear signs of recovery. Midtown leasing volumes were up more than 20% year-on-year, and demand for Class A space has pushed availability down to roughly 16% — the lowest since 2022.

‍San Francisco, by contrast, continues to face deep structural challenges. Availability remains above 30%, and effective rents are still 25–30% below pre-COVID benchmarks, despite modest absorption from smaller tenants.

‍Miami and Dallas–Fort Worth are outperforming, each maintaining availability near 15–17%, supported by in-migration, corporate relocations, and diversified tenant demand.

At the same time, office-to-residential conversions are gaining real momentum. More than 120 million square feet of obsolete office stock is now in active or proposed conversion pipelines across major metros — a development that could reshape urban inventories and valuation baselines.

For bankers and lenders, the takeaways are clear:

• National averages no longer capture credit risk accurately
• Monitor leasing velocity, sublease levels, and conversion activity by metro and property type
• Reassess refinancing assumptions for office loans maturing over the next 24–36 months, incorporating realistic rent recovery curves
• Integrate localized data into ongoing portfolio surveillance and loan renewals

The next phase of the office cycle won’t be defined by a single recovery trend.

It will depend on which cities adapt fastest — and which assets remain fit for purpose.

At ONCI, we help banks identify these regional inflection points by combining granular CRE data with forward-looking credit insights, enabling smarter, faster decisions in a shifting market.