CoStar, a global provider of real estate information, has issued a revised forecast for the U.
S. office market, upgrading its near-term outlook with projections for positive absorption and improved rent growth.
The revised forecast from CoStar indicates a significant shift in the U.
S. office market’s near-term performance. Following a third-quarter 2025 performance, the outlook now anticipates 10 million square feet of positive absorption over the next four quarters, an upgrade from the previous forecast’s projection of negative absorption of 4 million square feet. Rent growth is also expected to show better results, with projections reaching 1% by late 2026 and 1.5% by mid-2027. This contrasts with the prior forecast, which suggested rent growth would remain below 1% well into 2027.
Phil Mobley, national director of office analytics at CoStar Group, noted that the updated forecast accounts for the strongest quarter of occupancy gains since 2019, despite stagnant job growth in traditional knowledge industries. He stated, “Many occupiers, anticipating higher office attendance, have recently committed to additional space despite tepid hiring. This behavior is expected to boost absorption for several more quarters.”
In the longer term, CoStar anticipates per-employee space needs will be lower than pre-2020 levels, presenting a challenge to future demand. Consequently, vacancy rates are projected to remain structurally higher, exceeding 13.5% through the end of the decade. This would surpass the peak vacancy rate that followed the Great Recession by a full percentage point.
Mobley also identified potential downside risks to the positive outlook. He commented, “Persistent inflation and volatile trade policy suggest that economic growth is still poised precariously.” Furthermore, he pointed to preliminary benchmark revisions in employment data, which indicate a weaker job market over the past year than initially reported, particularly in key knowledge industries where a focus on tech-enabled efficiency could further reduce payrolls.
CoStar Group, headquartered in Arlington, Virginia, is a global leader in commercial real estate information, analytics, online marketplaces, and 3D digital twin technology. Established in 1986, the company focuses on digitizing real estate to provide insights and connections. Its portfolio includes major brands such as CoStar for commercial real estate data, LoopNet for commercial real estate marketplaces, Apartments.com for rentals, Homes.com for residential sales, and Domain in Australia, alongside other specialized platforms like Matterport for spatial data, STR for hospitality data, Ten-X for commercial real estate auctions, and OnTheMarket in the UK. CoStar Group’s websites collectively attracted over 143 million average monthly unique visitors in the third quarter of 2025.
