The Office Shortage Nobody Is Talking About

Everyone in commercial real estate knows the office market has too much space. The problem with that supposed truism is that it’s about to be wrong.

Not wrong about the headline numbers - vacancy is still elevated in Denver, Minneapolis, and most U.S. markets. But wrong about what those numbers mean for anyone making a real estate decision in the next 12 to 36 months. Because the space tenants actually want is vanishing, almost no new supply is coming, and a massive wave of lease decisions is about to hit the market at the same time.

The Disconnect

The national office pipeline has dropped 43% in a single year. Q4 2025 deliveries were the lowest since 2012. Across the entire Midwest, less than 500,000 SF is under construction. In Denver, meaningful new starts require heavy pre-leasing and are concentrated almost entirely in Cherry Creek.

At the same time, half of all pre-pandemic office leases 10,000 SF and above haven’t expired yet. Newmark estimates 1.4 billion SF rolls by 2027. While some of those tenants will reduce their space due to changing office dynamics, a far greater number - estimated at 69% of tenants by Newmark - are estimated to maintain or expand their footprint. When those tenants go looking, many will find the quality options they expected aren’t there.

And the vacancy that does exist? It’s largely in buildings nobody wants. Many of those are leaving the market permanently through conversions. Every one that does tightens the supply that remains.

This Isn’t Theoretical

In Manhattan, trophy buildings ended 2025 at 3.7% availability - essentially full. Large tenants are now starting searches five or more years before their leases expire. Nationally, the prime office vacancy is 14%, a full 6 percentage points below non-prime and the widest gap on record. Demand is expected to outpace new supply through 2026, tightening the top of the market further.

Not all markets are there yet. But the same structural setup is evident across the country: collapsing pipelines, rising expectations, and sublease inventory that dropped significantly in 2025.

The Decision in Front of You

If you’re renewing or relocating in the next two to four years, your leverage is at its peak right now. Concession packages are still generous in the best buildings, but that won’t last as quality supply tightens. 

If you’re evaluating office investments, the repricing window is narrowing. Average sale prices rose for the first time since 2021 last year. Well-located assets with repositioning potential are getting harder to find at distressed pricing.

If you’re considering development, the pipeline is at a 25-year low. New, well-conceived projects will face far less competition than the vacancy headlines suggest.

The best real estate decisions have never been about reading today's market. They've been about positioning for the market that's forming. Right now, the vacancy headlines say surplus. The pipeline, the lease wave, and the shrinking inventory say something very different. The players who act on where this market is headed - not where it's been - will define the next cycle.