Cushman & Wakefield (NYSE: CWK), a leading global real estate services firm, today released Global Office Supply: The Development Drought, finding that North American market rents averaged $77.03 per square foot (psf) in 2026, about 6% below the economic rent, which is the minimum rent a new office development needs to earn to be profitable. The report projects that average market rents will not catch up until the early 2030s.
Globally, the under-construction office pipeline stood at 580 million square feet (msf) in Q3 2026, 45% below its 2017 peak and its lowest level in a decade. The report attributes the decline to “higher for longer” interest rates, sharply higher construction costs and an investor pivot away from the office sector. In North America, economic rents overtook market rents in 2023, when construction costs rose by double digits and borrowing costs began to climb.
“Demand for high-quality, well-located space is resurging just as the supply pipeline is drying up,” said Sandy Romero, Head of Office & Alternatives Insights at Cushman & Wakefield. “Average rents have not kept pace with the cost of building, so in most North American markets new supply will have to be built with the quality and amenities required to get leading rents in order to pencil out. Existing top-tier space is being absorbed faster than it can be replaced, which is driving rent growth in that segment, as well as more lease renewals and earlier occupier searches.”
New York is the clear outlier among the markets analyzed. Market rents of $156.64 psf in 2026 were nearly 60% above the economic rent of $98.69 psf, and New York has already begun to see construction tick up, with 6.4 msf underway as of Q3 2026, nearly double the level from a year ago. More than 2.5 msf of office space is under renovation as owners respond to the flight to quality.
Elsewhere, the viability gap varies. Chicago has the widest near-term gap among the U.S. markets analyzed, with 2026 market rents of $84.56 psf, 10% below the economic rent of $93.75 psf, and Class A vacancy of 24.0%. Boston market rents of $78.59 psf were 8% below economic rent, and the market currently has no projects under construction or renovation. San Francisco is close to the threshold, at 4% below economic rent ($98.43 psf versus $102.94 psf), with strong demand from AI occupiers expected to drive a recovery even as Class A vacancy remains high at 31.1%. Boston and San Francisco are both projected to reach viability in 2029, while Chicago is not projected to do so until 2032. Given the typical timeline to develop a new office building is three to five years, these thresholds are not as far out as they may initially seem.
In Canada, the report forecasts market and economic rents converging in Toronto around 2031, with no new development currently expected to commence before 2032. Downtown Class A and AAA vacancy stands at 10%, falling to 7.1% in the Financial Core. In Vancouver, which recently completed its largest office delivery cycle on record, roughly 3.8 msf across ten towers between 2020 and 2024, metro vacancy rose to 11.8% in Q3 2026, the highest rate since the early 2000s. The report forecasts economic rent will exceed market rent there through 2035.
“For occupiers, limited new supply means rising competition for top-tier space, so planning well ahead of lease events matters more than ever,” Romero said. “For investors and developers, new starts are likely to remain selective. In the meantime, we expect more renovations of existing buildings and more build-to-suit projects, particularly in markets where demand for brand new space is already building.”
The report also analyzes development viability across APAC and EMEA, using a consistent economic rent framework that accounts for land, construction, operating, leasing and financing costs and developer margin, and offers strategies for occupiers, investors, developers and owners.
For additional insights and analysis, read the full Global Office Supply: The Development Drought report.
About Cushman & Wakefield
Cushman & Wakefield (NYSE: CWK) is a leading global commercial real estate services firm for occupiers and investors with approximately 53,000 employees in over 350 offices and nearly 60 countries. In 2025, the firm reported revenue of $10.3 billion across its core service lines of Services, Leasing, Capital markets, and Valuation and other. Built around the belief that Better never settles, the firm receives numerous industry and business accolades for its award-winning culture. For additional information, visit www.cushmanwakefield.com.
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