Office Landlords Are Regaining Leverage — Could Boise Be Next?

For years, office tenants held most of the cards.

High vacancy gave companies plenty of choices, landlords competed aggressively for deals, and generous concessions became a normal part of lease negotiations.

Now, a different story is emerging at the top of the office market.

According to reporting by Katie Burke of CoStar News, major office landlords including BXP, Kilroy Realty, Cousins Properties, and Vornado Realty Trust are seeing stronger demand for premium offices as companies compete for a shrinking pool of high-quality space.

You can read the original CoStar News article for the full national reporting and data.

Boise is obviously a much smaller office market than New York or San Francisco. But the underlying shift is relevant to Boise commercial real estate because it shows how an office recovery may actually unfold.

The headline isn’t simply “office is back.”

It’s that good office space could recover much faster than average office space.

Leasing Is Rising While New Office Construction Is Falling

The most interesting part of the national office story may be what’s happening on both sides of the supply-and-demand equation.

Companies are leasing more space.

At the same time, developers are building much less of it.

CoStar cited a CBRE report showing tenants signed more than 62.4 million square feet of office leases nationally over the prior year, roughly 16% more than during the previous period.

Meanwhile, only about 2.2 million square feet of new office space was completed over that same period, representing a sharp year-over-year decline.

That’s an important combination.

For several years, the office market had to work through excess space created by remote work, corporate downsizing, subleases, and companies reconsidering how much space they actually needed.

Developers responded by pulling back on new projects.

Now demand is improving in some markets, but the supply pipeline isn’t immediately responding.

Commercial buildings take years to plan, finance, permit, and construct. You can’t turn office development back on overnight.

That could eventually create tighter conditions for the best properties.

For Boise development, it’s a trend worth watching carefully.

The Best Buildings Are Separating From the Rest

BXP’s results help illustrate how quickly conditions can change for premium properties.

The major office landlord has completed more than 3 million square feet of leasing during 2026, according to CoStar. Roughly two-thirds of that activity occurred during the second quarter.

Another 1.3 million square feet of signed leases had not yet commenced.

BXP expects those future occupancies could push its portfolio to around 90% occupied by the end of the year.

Nationally, CoStar reported that vacancy for higher-end office properties is averaging around 8%, compared with a broader office vacancy rate that has recently moved below 14%.

The rent difference is even more striking.

Premium office asking rents are roughly 60% higher than those of less-desirable buildings, according to the CoStar report.

In some of BXP’s Manhattan properties, rents are running approximately 15% above year-earlier levels.

This isn’t evidence that every office landlord suddenly has pricing power.

It’s evidence that quality has become one of the most important dividing lines in office real estate.

That distinction matters in Boise too.

A modern office with strong parking, attractive common areas, good natural light, efficient layouts, nearby restaurants, and an appealing location isn’t necessarily competing directly with every vacant office suite in the Treasure Valley.

It competes with the relatively small number of alternatives offering a similar experience.

Boise Could Develop a Two-Tier Office Market

The national trend raises an important question for Boise office leasing:

What happens if companies continue returning employees to the workplace but remain selective about where they lease?

We could end up with two very different office markets operating at the same time.

The first would consist of newer, renovated, and highly amenitized buildings.

Those properties could experience declining vacancy, better rents, reduced concessions, and stronger renewal activity.

The second would include older buildings that haven’t been upgraded and properties with difficult parking, dated layouts, weak amenities, or less desirable locations.

Those buildings could continue struggling even while the overall market improves.

That means a falling office vacancy rate doesn’t automatically rescue every property.

In fact, the gap between winners and losers could become more noticeable.

For Boise landlords, that creates both a warning and an opportunity.

Owners who reinvest in their properties may be able to move their buildings closer to the competitive end of the market.

Owners who wait for improving market conditions to solve the problem for them may be disappointed.

Limited Construction Could Eventually Matter in Boise

One of the biggest national office trends isn’t happening inside existing buildings.

It’s what’s not being built.

Higher interest rates, elevated construction costs, uncertain demand, and difficult financing have dramatically reduced new office development.

That matters because office markets don’t stay frozen forever.

Suppose tenant demand improves over the next several years while very little new Class A space gets delivered.

The existing supply of high-quality office space becomes more valuable.

That’s essentially the dynamic major national landlords are beginning to describe.

BXP’s new Manhattan trophy tower offers an extreme example. The building is already more than half preleased well ahead of its expected completion, and the developer has reported rents meeting or exceeding expectations.

Boise isn’t going to replicate Manhattan’s numbers.

But the basic economics work the same way.

If companies want modern office environments and developers aren’t building many new ones, existing high-quality properties gain leverage.

That could also create opportunities for Boise office investment.

Rather than developing from the ground up, investors may find opportunities to acquire well-located older properties and renovate them into a stronger competitive position.

The key is buying at a basis that allows enough capital for meaningful improvements.

Local Insight: Office Isn’t Dead — Mediocre Office Is the Bigger Risk

The national office market continues to carry substantial vacancy, so I wouldn’t interpret these numbers as an all-clear signal.

But I also don’t think “office is dead” accurately describes what we’re seeing.

The more interesting question is:

What kind of office will companies actually pay for?

Businesses still need places to collaborate, meet clients, recruit employees, train teams, and build company culture.

But many companies no longer need to accept mediocre space simply because it’s close to the office.

Employees have experienced working from home.

If employers want them back in the workplace, the workplace has to offer something worthwhile.

That’s why location, design, amenities, parking, restaurants, outdoor areas, natural light, technology, and overall experience are becoming increasingly important.

For Boise commercial real estate landlords, I would focus less on competing solely through rent and more on understanding why a tenant would choose your building.

For tenants, the lesson is almost the opposite.

If you find a high-quality space that fits your long-term needs, don’t automatically assume something equally good will still be available a year from now.

What Boise Investors and Landlords Should Watch Next

The next stage of the office cycle will probably be less about overall vacancy and more about where vacancy is concentrated.

A few indicators could tell us whether Boise begins following the national premium-office trend:

• Class A vacancy versus overall office vacancy
• Lease renewal rates
• Free-rent periods and tenant-improvement allowances
• Average size of newly signed leases
• Sublease availability
• New office construction starts
• Asking rents for premium buildings
• Time on market for high-quality suites

If those indicators begin tightening simultaneously, landlord leverage could return faster than many tenants expect.

For investors, that could create opportunities in well-located office properties that can realistically compete for quality-focused tenants.

For developers, limited new construction could eventually create an opening—but only if rents rise enough to justify today’s construction and financing costs.

And for tenants, waiting for the market to hit some obvious “recovery” milestone may mean waiting too long.

Office markets don’t recover all at once.

They recover building by building.

And right now, the national evidence suggests the best buildings are moving first.

Mike Gioioso (joy-OH-so) has for 16+ years been helping companies of all sizes buy, build, and lease perfect places for business in greater Boise, Idaho and beyond.

www.streetsmartidaho.com mike@streetsmartidaho.com 208-209-9166

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