Asking rents continue to show remarkable stability and offer little insight into broader economics for current leasing activity. Asking rents have largely stagnated for the overall market, declining 5 bps QoQ and 35 bps YoY, but the Trophy and Class A segment grew by 16 bps QoQ and 68 bps YoY. This reflects a top-down stratification of rent growth which is occurring, whereby high-end segments which are becoming increasingly scarce are seeing aggressive rent growth, but little movement is occurring among commodity stock. Asking rent for buildings under construction increased by 14% YoY, and Q4 saw the highest volume of leases executed with starting rents above $100 per s.f. (full service gross) on record. History suggests that the aggressive increases in high-end rents are likely to continue: in the last cycle, buildings that delivered at the tail end of the development pipeline (completed 20102013) saw higher stabilized occupancy rates and 10-15% higher rental rates as a function of lack of competition when development activity slowed. Amid many positive developments, one of the most promising signals in 2025 was a sustained improvement in capital markets liquidity: each of the past seven quarters has seen investment volume increase year-over-year, and total transaction activity grew by 35% in 2025. While capital flows are improving, a large share of office owners are still grappling with financial pressures. Delinquency rates for office commercial mortgage-backed securities debt declined for two consecutive quarters to conclude 2025, but current delinquency rates of 10.6% are just 80 basis points below recent peaks, and there have been multiple instances of two consecutive months of delinquency declines that gave way to a continued rise in recent years. While elevated distress will continue to hamper capital expenditures including funding leasing concessions, increases in liquidity will allow distressed assets to flow to healthier ownership more efficiently, and typically precede an acceleration in new development activity by 12-18 months. Despite strong activity over the course of the year, the shortterm outlook now appears murkier than 12 months prior. 2025 saw several consequential policy shifts rolled out in methods that were chaotic by recent historical standards. While office tenants have largely continued executing the same strategies, there was a marginal softening of demand amid peak volatility. Continued unpredictability, or a breakdown in standardized government data products could generate heightened uncertainty and hamper business investment spending, which in turn will limit companies’ appetite for office upgrades and expansions. The most acute pressure in the office market over the short term will be an unprecedented lack of new development and net inventory reductions because of surging conversion and redevelopment activity. Just 19 million s.f. of office product is currently under development, more than 20% lower than the previous historical low in 2011, and the lowest total in over 30 years of recorded data. A persistent lack of new development and continued net reductions in overall inventory will drive rent growth in highend segments and force more renewal activity for large occupiers. If supply constraints become severe, occupiers may begin to pragmatically adopt more remote and flexible working arrangements, potentially undermining some of the progress of the leasing market recovery. INDEPENDENT MARKET REPORT By JLL as at 31 December 2025 / 38 / EXPANDING HORIZONS
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