2025 Office Trends Show a Market Settling into a New Normal
Based on 102 transactions completed by The Frame Team in 2025, the story was all about clarity. After years of mixed signals, tenants slowed the guessing game and started making real decisions. Vacancy levels largely leveled out as widespread downsizing tapered off. Rents stayed mostly flat, with landlords focused on filling space and keeping good tenants rather than pushing rate growth, while concessions stayed part of most deals.
Tenant demand throughout the year leaned heavily toward buildings that simply work better. Updated spaces with modern finishes, amenities, and efficient layouts consistently outperformed older product. Suburban locations with easy access, parking, and shorter commutes continued to win, especially as employees made it clear where they are actually willing to go to the office.
Return to office strategies also took shape in 2025. Companies moved past trial runs and committed to clearer hybrid or in office schedules. That shift brought longer lease terms, more intentional space planning, and fewer short term decisions. Healthcare, professional services, and public sector users remained steady drivers of activity across the market.
Investment activity began to stabilize as expectations reset. Cap rates moved higher early in the year before settling, giving private and owner user buyers room to reengage. Deals remained selective, with buyers prioritizing location, tenant stability, and long term flexibility.
By year end, the office market was not booming, but it was steady. 2025 marked a turning point toward balance and a more confident path into 2026.
South Puget Sound 4Q 2025 Office Insights
| Vacancy | 8.63% |
| Total SF | 43,634,498 |
| Vacant SF | 3,764,109 |
| Average Asking Rent PSF Full Service | $33.00 |
| Average Months to Lease | 4 – 8 Months |
| Average Sale Price PSF | $200 |
| Average Market Cap Rate | 8.50% |
| Months to Sale – Owner/User | 3 – 12 Months |
| Months to Sale – Stabilized | 3 – 9 Months |
The information in this update was composed by the Kidder Mathews healthcare and office brokerage team of Drew Frame, SIOR and Ryan Kershaw.
Data source: CoStar
About the Frame Team
As members of the Kidder Mathews Healthcare and Office groups, Drew Frame, SIOR, and Ryan Kershaw are experts in healthcare and office services, specializing in landlord and tenant representation, as well as sales, including investment and owner/user. The team has completed over $243,000,000 in sales in the last 24 months and actively represent more than 3 million square feet of property. For more information, visit kmteamframe.com.
About Kidder Mathews
Kidder Mathews is the largest fully independent commercial real estate firm in the Western U.S., with over 900 professionals in 19 offices across Washington, Oregon, California, Nevada, and Arizona. We offer a complete range of brokerage, appraisal, asset services, consulting, and debt & equity finance services for all property types. Kidder Mathews averages over $9 billion in transaction volume, manages more than 54 million square feet of space, and conducts 2,700 appraisal, consulting, and cost segregation assignments annually. For more information, visit kidder.com.
Read the full report at the link below.
Contact
Drew Frame, SIOR, Senior Vice President
Ryan Kershaw, Investments Specialist
Stay in the know and subscribe to our monthly Western U.S. Market Trends report and our quarterly market research.