Dive Brief:
- Office vacancies fell 30 basis points to 18.3% in the second quarter, the largest quarterly drop since 2015, CBRE said in its quarterly office report, released last week.
- Leasing activity rose 16% year-over-year to 62.4 million square feet. Activity over the last 12 months is up 4% from the prior period to 243 million square feet. CBRE expects leasing activity this year to surpass 2022 levels — the highest on record.
- Even as demand accelerates, occupiers are being thoughtful about the quantity, quality and location of their space, CBRE says in its 2026 Americas Office Occupier Sentiment Survey, also released last week.
Dive Insight:
For the third consecutive year, the majority of organizations plan to maintain or expand their space over the next three years in what CBRE says is a sign that occupier sentiment has stabilized. Hybrid work, the real estate company says, “is here to stay.”
Technology firms are a big driver of demand, particularly in top gateway markets. That demand is helping to offset large enterprises continuing to shrink their footprints, though less aggressively than in prior years, the report states.
In another sign of demand, both peak and average office use is rising, according to a workplace report that CBRE released last month. Office use is now above pre-pandemic averages, driven by a rise in the share of organizations implementing in-office policies, which doubled to 37% in 2025, although enforcement still lags.
Almost 90% of employers require workers to be in the office at least three days a week, up from 78% in 2025, but actual attendance isn’t that high, according to the occupier sentiment survey. The average days workers are in the office inched up from 2.8 in 2025 to 2.9 in 2026, but still sits below average employer expectations of 3.2 days.
One factor contributing to that gap could be a lack of investment in the office, CBRE says. Despite respondents to CBRE’s survey largely pointing to colleague engagement as an attendance driver, over half said workers are pushing back against inconvenient locations or a lack of amenities.
Nearly half, or 47%, of organizations rate the workplace experience they offer employees as insufficient, and only 14% said they are pursuing meaningful reinvention. Despite falling short of what they want, organizations are spending less per employee in real terms than they were before the pandemic, “even as employee wages and company revenues have grown,” CBRE says. “As a result, many companies are occupying offices that do not meet business needs.”
Organizations are stuck between two opposing workplace agendas, CBRE says: optimizing space versus enhancing employee experience.
While space optimization emphasizes doing more with less, enhancing employee experience requires real investment, CBRE says. If organizations don’t appropriately balance the two agendas, the company says, “the risk is significant. The office will remain expensive but not differentiated, mandatory but not magnetic and occupied but not effective.”
The dueling agendas could become unsustainable as corporate real estate teams grapple with high-priority business initiatives such as AI adoption and digital transformation.
AI is impacting space planning decisions for 23% of organizations, while 30% expect it to result in meaningful impacts within the next two years, CBRE’s occupancy report states. Half of occupiers expect AI adoption to spur a shift toward multipurpose, reconfigurable space, and 36% expect it to drive the need for higher-quality amenities and experiences in their office to attract talent.
About a third of respondents think AI will lead to reduced headcounts and less total space, but CBRE says it’s not clear that this is how occupancy needs will change. Rather, AI will “more likely result in heightened demand for premium space rather than less space,” it says.
In the near term, AI is making it difficult for organizations to predict how much office space they need, according to a Censuswide survey of 1,000 high-ranking executives. The survey found that 73% of executives, all either CEOs or CFOs, think technological change, including AI, has made their organization less willing to commit to long-term leases or traditional real estate solutions.
Almost all, or 99.8%, of respondents in that survey said they are actively transitioning real estate costs from fixed to more variable. This supports CBRE’s report, which says that flexibility has become a “defining priority” for occupiers navigating economic uncertainty, shifting utilization patterns and the unknown impacts of AI.
Flexibility mechanisms occupiers want, such as expansion and contraction rights, break clauses and shorter terms, are already largely embedded in traditional leases, with coworking also emerging as a way to improve tenant flexibility, CBRE says.
As a result, office landlords who build flexibility into their standard offering “are more likely to retain tenants and attract new ones,” the firm says.
