Core Insights - The U.S. office market is showing signs of recovery from the pandemic-induced slump, with a healthier vacancy rate indicating a potential turnaround [3][7] - Average office rents in the U.S. have increased by 1.7% year-over-year, reaching $32.47 per square foot in Q3, although inflation-adjusted rents remain at their lowest since 1988 [4] - Demand for office space is stabilizing, driven by a return-to-office trend and increased space allocation per employee, which has risen from 146 square feet to 149 square feet [6] Vacancy Rates - U.S. office vacancies have declined year-over-year for the first time since Q1 2020, dropping to 18.8% in Q3 from 19% in the previous year [7] - This decline in vacancies is attributed to a reduction in supply, as new construction is slowing and older office spaces are being prepared for demolition or repurposing [7] Rental Market Dynamics - The average asking rents are still lower on an inflation-adjusted basis, indicating a tenant-favorable market outside of prime office spaces [5] - Corporate expenditure costs are rising faster than rent increases, suggesting that tenants still hold leverage in negotiations, particularly for non-prime spaces [5]