U.S. office vacancy hit a new high as commercial real estate’s subdued 2025 performance carried into the first quarter of 2026, according to a report from Moody’s Analytics.

Two markets in Texas and California led the increase in vacancy rates, with nearly 1M SF of office occupancy losses each.

The industry is navigating an “increasingly complex set of crosscurrents,” including renewed inflationary pressure, resilient high-income consumer spending and restrained office leasing demand that will likely keep CRE performance uneven in the near term, per Moody’s Analytics CRE Preliminary Trend Analysis for Q1 2026. 

The 21% office vacancy rate is up 10 basis points from the previous quarter and up 60 bps from the previous year. The new vacancy rate is 4% higher than the 17% vacancy rate recorded in 2020 at the start of the pandemic. 

Oakland-East Bay, California, led the U.S. in negative absorption with 944K SF of occupancy lost, according to the report. That was followed by Austin with 870K SF of negative absorption, then Chicago with 571K SF lost and San Jose, California, with 540K SF lost. 

Occupied office stock expanded during 2021 and 2022 as firms worked through pre-pandemic leases, but now 10 of the last 13 quarters have shown net contraction. The overall decline was 5.2M SF in the first quarter, bringing the decline since 2025’s first quarter to nearly 20M SF, the report states.

The trend reflects structural and cyclical forces, including the demand for higher-quality space and smaller footprints. Moody’s expects vacancy to continue rising this year as more leases expire.

Across all asset classes, Moody’s reports broadly stable performance. Multifamily rent growth remained modest, increasing less than 1%, amid a 10-bps increase in vacancy to 6.8%. Markets with the most aggressive construction pipelines, particularly Sun Belt markets like Dallas, Phoenix, Charlotte and San Antonio, saw increased vacancy rates. 

Retail “delivered mild upside surprises” with a flat vacancy rate of 10.4%. Strong consumer spending is helping but keeping the sector steady rather than spurring growth as labor markets soften and cost-of-living pressures increase.  

Industrial rents flattened as vacancy ticked up 10 bps to 8.4%, its highest level since 2021, as inventory growth narrowly outpaced occupancy gains. Industrial net absorption totaled 1.3M SF during the quarter. 

Echelon Resources Inc. and LBD Investments are taking over Showplace West/One Plaza Center to redevelop it into market-rate apartments and about 9,000 square feet of retail.

The eight-story, 135,000-square-foot concrete office building at 101 S. Main St. was completed in 1971. In 2019, International Market Centers donated it to Downtown High Point. It was acquired in 2011 for about $1.49 million. The former office building was recently placed on the National Register of Historic Places.

Echelon Resources specializes in redeveloping historic buildings. It says it has repurposed several former factories, mills, warehouses, schools and residential buildings.

EDB, meanwhile, focuses on urban and suburban infill mixed-use and historic redevelopment projects in the Southeast.

High Street Residential (HSR), the residential subsidiary of Trammell Crow Company, has broken ground on the Residences at Perimeter Summit. The seven-story, 350-unit mid-rise multifamily community is located in Brookhaven, Georgia. HSR paid $11.5 million for the property at 1251 Perimeter Summit Pkwy. The project is part of Perimeter Summit, a mixed-use community consisting of 1.7 million square feet of office and retail space across four buildings, a 182-room hotel, and a condo building.

The Residences at Perimeter Summit will include units from 900 square feet to mid-1,400 square feet. Unit amenities will include private balconies in select units. The project will also boast amenities such as an elevated pool, three spacious courtyards, a 1,200-square-foot speakeasy lounge, a fitness center, a clubroom, a coworking center, private conference and study rooms, a tasting room, a pet spa, and a golf simulator.
 
Cooper Carry is leading the design of the project, and New South Construction is providing construction services for the development

Beta Agency SVP Adam Friedlander represented the seller of a Raising Cane’s Restaurant located in Carson. The sale price was $7,525,000. The undisclosed buyer was a private California investor in a 1031 exchange.

Friedlander said, “The sale of the Raising Cane’s in Carson represents the highest-priced sale of a fast-food restaurant in California to trade this year. In addition, this is only one of three Raising Cane’s leased investments to trade in California in 2024. Selling a high-rent NNN investment at a low cap rate is a difficult task given existing market conditions. We are very pleased with the results.”

Built in 2022, the 2,950-square-foot restaurant is occupied in a 12-year, triple-net lease. Located directly across from the 1.1-million-square-foot South Bay Pavilion Mall, the property benefits from a dense surrounding demographic and significant vehicular traffic, according to Beta Agency.

High Street Residential, a Trammell Crow company, has closed on 4 acres at 5005 Perimeter Blvd in Brookhaven. It paid $11.5 million in an all-cash transaction. 

The Atlanta Business Chronicle reports High Street plans to develop around 350 apartments at the corner of Perimeter Center Parkway and Lake Hearn Drive. Rising seven stories, this will be the first set of residences as part of Perimeter Summit. Perimeter Summit already has four office towers and a Hyatt Regency Hotel.

Even though financing has not been secured, High Street plans to break ground in November. High Street is a wholly owned operating subsidiary of Trammell Crow Company (TCC), which specializes in the development of multifamily housing. They say on their website they have a deep background in urban and suburban, infill mixed-use residential development, as well as the redevelopment or repurposing of existing facilities.

Register today for Connect Phoenix Multifamily & Single-Family Build-to-Rent, scheduled for April 18 at the Westin Kierland Resort & Spa, Scottsdale, AZ.