According to the WSJ, the US office market saw a significant increase in leasing activity in the first quarter of this year. Approximately 115 million square feet of space was leased, which represents a 13% increase from the previous quarter and the highest level since before the pandemic in mid-2019.

But then, tariffs for everybody! Now tenants are worried that a recession is coming, inflation is going to rise, and that so too will interest rates. Uncertainty is bad for business.

Here's where things broadly sit as of the beginning of this year:

• The national office vacancy rate was 19.7% at the end of February 2025

• San Francisco had the highest vacancy at 27.8%

• $7 billion worth of office sales were recorded in the first two months of the year and the average price was $177 per square foot

• The cheapest markets are/were in the midwest with Minneapolis-Saint Paul recording the lowest average sale price of $50 per square foot (versus $215 psf a year ago)

• Chicago averaged $67 psf

• The most expensive markets were places like San Diego ($662 psf), Manhattan ($450 psf), San Francisco ($282 psf), Miami ($239 psf), and Los Angeles ($207 psf) — we continue to see a flight to quality

Maybe things will get better later this year, or maybe they won't. It's impossible to know what comes next in this trade war.

Cover photo by Delia Little on Unsplash