March 2026
Office supply gaps, private credit stress, data center politics, and a nuclear milestone.
IN THE MARKET
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.
ON OUR MINDS
Echoes of 2008. Private credit rushed into CRE after the financial crisis as nonbank lenders filled the gap left by retreating banks. Now that sector faces its own stress test: lender stocks down 25%+, redemption requests spiking, nearly $1 trillion in CRE loans maturing this year, and JPMorgan restricting credit to private funds after marking down loan portfolios. The biggest blowups so far trace to fraud, not systemic CRE distress. But banks fund the funds that fund the deals, so tightening at the top cascades down. We're watching closely for signs of contagion.
Boom Meets Backlash. As demand for data centers continues to grow, so does the backlash - from Denver's moratorium to a dozen statehouses to the floor of the U.S. Senate. Big Tech recently pledged to foot the bill for energy cost increases, but the commitments are voluntary and the details still thin. Is a handshake enough to solve the issue?
A Nuclear 4th of July. We've enjoyed tracking the nation's progress on a reinvigorated nuclear energy industry. In February, the U.S. military airlifted a modular nuclear reactor for the first time, flying a microreactor nearly 700 miles from California to Utah. And the DOE is pushing to bring three advanced reactors to criticality by our 250th birthday on July 4, 2026. Whether they hit that deadline or not, the momentum is real and the implications for energy-hungry sectors like data centers are worth watching.
We remain grateful for your continued partnership and trust. If any of these topics hit close to home - whether it's a lease decision on the horizon, an acquisition or disposition question, or just a conversation about where the market is headed - we'd welcome the chance to think through it with you.
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