As the year comes to a close, U.S. office vacancies continue to drop and real estate investment activity begins to rise. 

The U.S. commercial real estate market may finally be recovering.

As we near the end of the year, leasing activity is coming back, vacancy rates continue to drop in major cities, and, with limited supply, the U.S. office real estate market is becoming very appealing to international investors, according to Henry Chin, global head of research at commercial real estate services and investment firm CBRE.  

“The momentum and the sentiment within the U.S. is very, very strong,” says Chin. “It’s fantastic news.”

CBRE continues to upgrade its 2025 projections. At the start of the year, CBRE projected real estate investment volume to increase 10%, but revised that forecast to 15%. Now, Chin expects to see 16% to 17% growth this year.

“The recovery has kicked off,” says Chin. This, after the U.S. has lagged behind the rest of the world. Unlike in America, the return to office debate is no longer an issue in Europe and Asia Pacific. Many European organizations, for instance, had hybrid, flexible work schedules long before COVID, so people simply returned to the status quo.

Only now is the U.S. office market showing signs of recovery, making it more attractive to investors than other global regions, says Chin. Gateway cities like San Francisco, New York, Boston, Chicago, Los Angeles, and Washington DC are seeing lower office vacancies and limited supply of prime office space. In October, the U.S. office market recorded its first year-over-year decline in vacancy since 2020, falling to 18.8%, according to a recent CBRE report.  In some markets, it’s lower: the vacancy rate in Park Avenue New York is now 6% and in the Midtown core, it’s 9%. “There is just not much space,” says Chin.

Those factors, plus liquidity and a recent interest rate cut are fueling renewed interest among investors, he says.

Business leaders are taking up smaller office footprints, 20,000 to 50,000 square feet, due to hybrid work and the lack of quality space. Employers are seeking prime spaces—those built after 2010 which include collaboration spaces, on-site cafes, fitness centers, wellness spaces, natural light and outdoor spaces. These offices also tend to be near transportation hubs or places with plenty of parking, too.

Inventory has stayed tight because construction remains costly—with expenses at least 20% to 25% higher than they were in 2019, according to Chin. That means developers are being very selective, and new builds are rarely happening. Employers, too, are staying put and renewing leases to avoid the expense of renovations.

“We’re seeing a widespread recovery in the office spaces,” says Chin. “And we believe the momentum will continue into 2026.”