By March, the national office construction pipeline totaled 45.1 million square feet, accounting for only 0.7 percent of overall office inventory, according to the latest Yardi Matrix U.S. office market outlook.
Report Highlights
- The national office vacancy rate stood at 19.9 percent at the end of March, nearly flat from the previous month.
- National full-service equivalent listing rates averaged $33.42 per square foot, rising by one cent from the previous month and 4.9 percent year-over-year.
- The office construction pipeline continued to contract, featuring 45.1 million square feet under development as of March.
- Office investment totaled $10.3 billion during the first quarter of 2025, with office properties trading at an average of $183 per square foot.
Tech hubs struggle as vacancies rise
The national office vacancy rate climbed to 19.9 percent as of the end of March, representing a 170-basis-point increase from the same period last year. Compared to February, however, the rate remained largely unchanged. Markets with a strong tech presence continued to struggle the most; Five major metros recorded vacancy rates exceeding 25 percent, including Austin at 28.5 percent, the Bay Area at 25.5 percent, Denver at 25.2 percent, San Francisco at 28.6 percent and Seattle at 27.5 percent.
Meanwhile, national full-service equivalent listing rates averaged $33.42 per square foot in March, rising by one cent from the previous month and showing a 4.9 percent increase year-over-year. Yardi Matrix data highlights Manhattan as the nation’s priciest office market, with average asking rates reaching $69.03 per square foot. San Francisco followed at $63.83 per square foot, while Miami came in third at $55.84 per square foot.
Development slows, sales remain focused
As of March, the national office construction pipeline stood at 45.1 million square feet, representing just 0.7 percent of total office inventory, according to Yardi Matrix. The ongoing slowdown in development is expected to continue. After a modest 11.9 million square feet of office starts in 2024, only 2.6 million square feet of new groundbreakings had been recorded in the first quarter of 2025.
Boston led all U.S. markets with 6.3 million square feet of office space under construction, amounting to 2.4 percent of its existing inventory. Austin and San Francisco followed, each reporting 3.1 million square feet underway—equal to 3.3 percent and 1.9 percent of their total stock, respectively. Dallas was not far behind with nearly 3.1 million square feet in progress (1.1 percent of inventory), while San Diego completed the top five with 2.7 million square feet under construction, representing 2.8 percent of its office stock.
On the investment side, office sales reached $10.3 billion during the first quarter of the year, with properties changing hands at an average of $183 per square foot. Manhattan led the nation by a wide margin, totaling $2 billion in sales volume, followed by Washington, D.C. with $767 million and the Bay Area with $727 million.
Read the full Yardi Matrix Office Market Report: April 2025.
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