Despite uncertainties about the economy, net absorption of office space was positive for a fourth consecutive quarter and demand is projected to continue to grow for the rest of the year, according to the NAIOP Research Foundation's Office Space Demand Forecast released today.

Net absorption of office space is the amount that is occupied less the amount that is vacated. According to the report, "first-quarter absorption totaled 5.6 million square feet, which followed 7.3 million square feet absorbed in the fourth quarter of 2024."  This continued growth in demand for office space is due in part to the plateauing of remote work, as more employers require employees to spend more time in the office. With this stabilization in how employers use office space, the biggest determinant of demand going forward will be the rate of growth in office-using employment.

Disruptive changes to U.S. trade policy and growing concern about federal debt levels have dimmed the outlook for economic growth and increased the risk of a recession while simultaneously contributing to higher long-term interest rates. With this in mind, the report’s authors estimate net office space absorption for the remainder of the year will be just under 25 million square feet. Net absorption in 2026 is projected to contract to 15.1 million square feet, constrained by legacy leases and slower job growth, with just 6.7 million new jobs expected between 2023 and 2033 – significantly less than the nearly 20 million added from 2009 to 2019.

“These consecutive quarters of positive absorption are a promising sign that the office market is finding its footing,” said Marc Selvitelli, NAIOP president and CEO. “While uncertainty remains in the broader economy, this trend reflects growing stability and adaptability among office users as employers and employees alike are recalibrating how they use office space.”

The Office Space Demand Forecast is written by Hany Guirguis, Ph.D., Dean, O’Malley School of Business and Professor, Economics and Finance, Manhattan University, and Joshua Harris, Ph.D., CRE, CAIA, Executive Director, Fordham Real Estate Institute, Fordham University.