Scope: National · Property type: Office · California tie: San Francisco, Orange County, Bay Area
What Happened
Office is recovering, but it is recovering unevenly, and the loans don't care.
CBRE put national office vacancy at 18.3% in Q2, down 30 basis points in the quarter, which it called the largest quarterly drop in more than a decade. Cushman & Wakefield put it at 20.1%, down 10 basis points from a year earlier. The firms count different buildings, so the 1.8-point gap is a methodology gap, not a disagreement about direction. Both show leasing up: CBRE counted 62.4 million square feet in Q2, up 16% from a year earlier.
Meanwhile the debt keeps coming due. The Mortgage Bankers Association estimates 17% of outstanding commercial and multifamily mortgages, about $875 billion, mature in 2026, and roughly $2.1 trillion between 2026 and 2028. MBA also forecasts originations rising to about $805 billion this year, which means lenders are lending again.
Put those together and the question changes. It isn't "is office coming back?" It is "which buildings can prove they are?"
The Bigger Picture
Vacancy is falling mostly because supply is leaving. CBRE says Q2 completions were 2.2 million square feet, the lowest first-half total since it began tracking in 1990, and the pipeline is 87% below its 2020 peak. Cushman & Wakefield shows inventory down 33 million square feet over five quarters, with 20 markets shrinking by more than 1% a year.
The gains are concentrated. CBRE says the gap between prime and non-prime vacancy is the widest on record: 12.3% prime nationally, and 2.2% in Midtown Manhattan prime. Cushman & Wakefield found the largest annual vacancy declines in San Francisco, Orange County and Midtown Manhattan, and improvement in 49 of 92 markets, so 43 did not improve.
The other side of the market is still under strain. KBRA's September report (published Sept 30) has CMBS office distress at 17.6%, with One SoHo Square ($469 million across six conduit deals) newly in special servicing. KBRA uses its own distress definition.
Labels: vacancy, leasing, supply and distress figures are confirmed fact from each firm. Maturity and origination figures are MBA estimates and forecasts. The reading of what it means is TenantScout analysis.
What we couldn't confirm: we did not find reliable Q3 2026 office data for the Inland Empire. The Inland Empire's strength is industrial, and a market-level piece will follow when the Q3 numbers publish.
What It Means for Tenants
Lenders underwrite occupancy. A building with vacancy that is coming up for refinance has to show a credible path to filling it. Tenants looking at space in those buildings are in a stronger position than usual: the owner needs signed leases for the loan, not just interest.
In prime buildings, leverage is thinner. Rent growth forecasts were raised to 2.7% for 2026 from 1.5% (CBRE, a forecast). Expect less free rent and shorter windows in tight submarkets.
Sublease is a shrinking fallback. Sublease vacancy is 95.6 million square feet, down 15.4% from a year ago and 28% from the Q1 2024 peak (Cushman & Wakefield).
Ask about the debt. A landlord whose loan is in special servicing may move slowly on tenant improvements and approvals. Ask who the lender is early.
The Broker Angle
This is where the market and the work meet.
An owner with a maturing loan and 30% vacancy has a deadline and a gap. The lender wants a lease-up plan, and building one means knowing which businesses in the area are likely to need space, and being able to say so with evidence. That is the work TenantScout is built for: a ranked list of the right tenants for that specific building, in hand before the first lender conversation.
For landlord reps: pitch the owner the lease-up plan, not the listing. For tenant reps: a building with a refinance clock is a negotiating asset, and now is the time to ask. For investment brokers: vacancy plus a maturity date is a pricing conversation, and a credible lease-up plan moves it.
What We're Watching
- Q3 vacancy and absorption releases from Cushman & Wakefield, CBRE, JLL and Moody's over the next one to three weeks. Do the two firms' numbers move closer or further apart?
- California maturities. We want market-level maturity and refinance data for Los Angeles, Orange County and the Inland Empire. National figures only tell part of it.
- October CMBS reports (KBRA, Trepp), and whether One SoHo Square is a pattern or a one-off.
Sources: CBRE US Real Estate Market Outlook Midyear Review 2026 (June 2026); CBRE Q2 2026 office figures (July 30, 2026); Cushman & Wakefield Q2 2026 office report (July 8, 2026); KBRA CMBS Loan Performance Trends, September 2026 (Sept 30, 2026); Mortgage Bankers Association CREF maturity and origination forecasts (February 2026). Figures are national unless noted.