U.S. offices added 115M sq ft of new leases in Q2 — but many big markets still lag

Why this matters

The addition of 115 million square feet of new office leases in the second quarter signals a notable uptick in leasing activity, suggesting that institutional investors and occupiers are cautiously re-engaging with the office sector. However, the persistence of underperformance in many major markets tempers this optimism, highlighting uneven recovery dynamics across the U.S. office landscape. This bifurcation underscores the ongoing structural challenges facing office real estate, including shifts in workplace strategies, hybrid work adoption, and localized demand disparities. For allocators and capital providers, the headline points to a bifurcated risk-return profile within office portfolios. Markets showing leasing momentum may attract renewed capital inflows, while lagging metros could see continued valuation pressure and tighter underwriting standards. The leasing volume also reflects evolving landlord-tenant negotiations, where concessions and flexible terms remain critical to securing occupancy. Lending conditions may remain cautious, with lenders scrutinizing market-specific fundamentals rather than applying broad sector assumptions. Overall, the data suggests that while office leasing is not uniformly depressed, recovery is uneven and selective. Institutional capital will likely continue to differentiate between markets and submarkets, emphasizing granular analysis over sector-wide optimism.

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