The U.S. office market is showing signs of stabilization, according to a new NAIOP Research Foundation report. NAIOP, the Commercial Real Estate Development Association, is the leading organization for developers, owners, investors, and related professionals in office, industrial, retail, and mixed-use real estate. 

After five consecutive quarters of declining demand, net office space absorption turned positive in both Q2 and Q3 2024, reaching 1.0 and 4.9 million square feet respectively.

The forecast, authored by researchers from Manhattan College and Fordham University, projects continued improvement with 9.4 million square feet of absorption expected in Q4 2024 and 10.8 million square feet in 2025.

This recovery is attributed to strong macroeconomic performance and increased return-to-office mandates from prominent firms. However, challenges remain as new construction continues to outpace demand. CoStar data shows 17.0 million square feet of new space was delivered in Q2-Q3 2024, pushing the average vacancy rate slightly up to 11.8%.

"We're pleasantly surprised to see positive absorption in the office market, driven by demand in the tech sector and the decisions of many companies to bring their teams back to the office," said Marc Selvitelli, NAIOP president and CEO, though noting that a potential recession could still impact recovery.