The Great Office Stagnation: Why Vacancy is Holding Steady Despite Falling Supply

While CoStar predicts a vacancy standstill at 14%, Moody’s reports a record high of 21%. Dive into the diverging data as AI demand and inventory demolitions reshape the 2026 office recovery.

By: AXL Media

Published: Apr 30, 2026, 11:23 AM EDT

Source: Bisnow

The Diverging Data: CoStar vs. Moody’s

The biggest takeaway from Q1 2026 is the widening gap between major data providers, reflecting the "increasingly complex crosscurrents" of the current market.

CoStar’s Optimism (14.0% Vacancy): CoStar reports a slight dip from 14.1% in Q4 2025. National Director of Office Analytics Phil Mobley suggests vacancy will plateau here before a slow descent in 2027. This data includes a broader universe of properties, such as medical offices and smaller tertiary markets, which have remained more resilient.

Moody’s Analytics (21.0% Vacancy): Conversely, Moody’s reports a record high, focusing on major metro CBDs (Central Business Districts) where the "flight to quality" has left older Class-B and C stock entirely stranded.

Tenant Demand: Despite the vacancy debate, the VTS Office Demand Index shows that tenant requirements are up 13% year-over-year, marking the highest level of active demand since the pandemic.

The Inventory Squeeze