(TNND) — The U.S. office market seems to have turned a corner in its recovery from the pandemic.

The days of companies shedding office space amid the rise of remote and hybrid work have largely stopped.

And office market metrics are now showing strength.

“So clearly, I think that we're solidly at a point where the market has reached a turn,” said Julie Whelan, global head of occupier thought leadership at CBRE, the world’s largest commercial real estate services and investment firm. “We have been careful to say that the last couple quarters, but I think that with the leasing volume that you saw along with the positive net absorption, it was a really positive sign for the market.”

CBRE released its fourth-quarter 2024 office market figures last week.

The overall vacancy rate fell by 10 basis points to 18.9%.

That was the first decline in vacancy since the fourth quarter of 2021.

Net absorption totaling 10.3 million square feet was the highest quarterly total in three years. Net absorption is how much more (or less) space is occupied (or vacant) on a market at the end of the period versus the beginning of the period.

“We felt that we were absolutely in a period of stabilization,” Whelan said. “And now it feels that that period of stabilization is really turning into a period where recovery is beginning. And I think that's a positive thing for the market.”

Whelan said they weren’t expecting the small decrease in the vacancy rate.

“We were expecting that vacancy was going to stay pretty stable through this year,” she said. “That does not mean that it's going to drop like a rock. We actually don't forecast out in our horizon that vacancy is ever going to get back to where it was before the pandemic.”

Some office buildings will just stay obsolete, she said.

Some will be converted to other uses.

A record number of office conversions were completed last year, with those buildings finding new lives as apartments, hotels and more.

“Anecdotally, there are more demolitions happening,” Whelan also said.

And new office construction is slowing.

Those projects take years to complete. And during the height of the pandemic, there was 115 million square feet of quality new office space coming online without the accompanying demand.

Space under construction fell to 24 million square feet by the end of last year, less than half of what it was a year earlier.

The reduced pipeline of new prime space should give the market time to catch up and make use of the office buildings that are already built.

Whelan said American companies were forced into remote working situations by the pandemic and then some felt compelled to shed office space under the threat of a recession.

The economy, though still plenty uncertain, feels like it’s on better footing now, Whelan said.

She also said the remote-work pendulum “is swinging a little bit back to the middle.”

That won’t mean five days in the office for every worker or every company, Whelan said.

“But I think that most companies are understanding what hybrid means to them today, and that is that kind of three-plus days in the office,” she said. “And as a result, some of them need more space today or they're comfortable renewing or moving and relocating into larger amounts of space.”

Demand for the highest quality office space is improving.

The prime office vacancy rate fell by 10 basis points quarter-over-quarter to 15.3%, while the nonprime vacancy rate stayed at 19.2%.

CBRE expects the vacancy rate in prime buildings to return to its prepandemic rate of 8.2% by 2027.

CBRE saw positive net absorption last quarter in 32 of the 57 markets it tracks. And it saw improvements in 36 of those markets.

Even San Francisco, which was hit hard by the shift to remote work, saw net absorption that improved year over year and ended up in positive territory last quarter.

Sunbelt cities continue to see strong office markets.

Chicago is probably the most notable of the rust belt markets. The Windy City’s net absorption was still slightly negative in the fourth quarter and worse than it was compared to last year, but only slightly.

Detroit is still in that negative territory but slightly better than it was last year.

Those rust belt markets are plodding along, and they are in a steadier place than they were, Whelan said.

Office markets that are sitting on top of transit lines are doing quite well, she said.

The best example is the area around Grand Central Terminal in Manhattan.

Whelan said there’s “just unsatiable demand” for office space there, along with incredible improvement in net absorption and leasing over the last quarter.