How Office Occupiers Are Reshaping Commercial Real Estate in 2025

The U.S. office market in 2025 is not just recovering, it's transforming. While leasing volumes and occupancy rates have shown encouraging signs of stabilization, the underlying behaviors of office tenants are evolving in structural ways. These changes are reshaping the decision-making of landlords, investors, and occupiers alike. Understanding what’s driving this shift is essential for those navigating the post-pandemic real estate landscape.

1. Tenants are turning into buyers 

Over the past few years, an increasing number of office users have transitioned from leasing space to purchasing buildings. Historically, owner-occupied transactions accounted for a small share of office sales, but this changed significantly starting in 2022. By 2024, office occupiers were behind nearly 30% of acquisition volume, triple their historical average.

While this activity has tapered somewhat in 2025 as investor confidence returns, occupier-led purchases remain elevated. For many companies, owning space offers greater control, long-term financial predictability, and the ability to customize work environments without relying on landlord investment.

This trend is particularly relevant in cities where valuations have reset and financing for institutional buyers remains conservative. As a result, occupiers who can deploy capital are seizing opportunities that would have once gone to large investors.

2. Smaller leases reflect a shift in demand, not a lack of activity 

Leasing activity has largely returned to pre-pandemic levels in terms of deal count, with around 30,000 office leases signed per quarter over the past year. But the nature of these deals has changed. Average lease sizes are now 15% to 20% smaller than they were before 2020.

The reasons for this shift are multifaceted:

• Corporate downsizing and space consolidation
• Reluctance to invest in costly build-outs
• A leasing market increasingly led by smaller, more nimble tenants

This pattern is playing out nationally. Only a handful of top-tier office markets, such as Miami, have bucked the trend and posted increases in average lease size. Until there is more move-in-ready inventory suited for larger tenants, right-sizing will likely remain the norm.

3. Hybrid Work Is Changing the Math on Space per Worker 

One of the more surprising trends is the evolution of space usage per employee. Although total leased square footage remains below 2019 levels, the average space per in-office worker has increased.

Today’s workplaces are accommodating fewer people on a daily basis, but with more space per person. Data shows that companies now average about 188 square feet per employee, down from 203 square feet in 2019. However, when adjusted for hybrid work attendance, the actual square footage per on-site worker is now higher than it was a decade ago.

Several drivers explain this paradox:

• Greater emphasis on privacy for virtual meetings and focused work
• Flexibility to accommodate peak in-office days
• Investment in amenities and layout diversity to improve the employee experience

Some tenants are even reclaiming space they had previously shed, responding to operational needs that couldn’t be met with overly efficient footprints.

Conclusion

The office sector in 2025 is defined less by the volume of space leased and more by how space is being used, managed, and acquired. Occupiers are taking a more strategic and ownership-oriented approach, emphasizing flexibility, functionality, and experience. These behaviors mark a departure from legacy models and will shape the trajectory of commercial real estate investment and planning in the years ahead.