Office sector benefitting from rise in attendance, JLL says

Core Insights - U.S. office leasing reached a post-pandemic high in Q4 2025, driven by return-to-office trends and significant long-term commitments from companies [1] Group 1: Office Leasing Trends - 97% of Fortune 100 employees are now required to work in a hybrid or full-time in-office capacity, resulting in an average attendance of four days per week and a 15% year-over-year increase in large-scale transactions [2] - Annual leasing volume increased by 5.2% year over year, totaling 207 million square feet, with Q4 transactions reaching 55.1 million square feet, marking a post-pandemic peak [4] Group 2: Market Dynamics - Federal government attendance policies have aligned more closely with private sector practices, enhancing daily office foot traffic in major federal enclaves [3] - The supply of office space is at record lows, with inventory under construction down 20% below historic lows, and total vacancies at 22.2% at year-end [4] Group 3: Market Performance - Gateway markets outperformed secondary markets, with a 15% year-over-year growth compared to 3.5% for secondary and 3.3% for tertiary markets [5] - Major cities like New York and the San Francisco peninsula saw inventory increases of 2.6%, while Silicon Valley and Phoenix experienced growth of 1.3% and 1%, respectively [5] Group 4: Future Outlook - The steady recovery in demand over the past three years, coupled with a slowdown in new supply, is pushing more markets into "expansionary conditions" [7] - New York is benefiting from ongoing expansion in finance and professional services, while AI-focused firms are contributing to growth in the Bay Area [7]