The US office market reached an important milestone in the third quarter as the overall availability rate peaked and began declining for the first time in more than five years. This comes as companies like Amazon (AMZN) have pushed for employees to return to the office five days a week, sending office attendance rates to a post-pandemic record in July.

JLL CEO of Americas Markets John Gates joins Asking for a Trend to break down the state of the American office market.

"It's been slowly recovering for some time now, maybe even 18 months. We saw an acceleration, though, in the third quarter and some of the statistics start to look pretty good. Total leasing volumes in Q2 and Q3 were about 86% of pre-pandemic levels, which is the highest that it's been," Gates says of the market.

He notes that the Federal Reserve's 50-basis-point interest rate cut impacted the market "pretty meaningfully." As commercial real estate is a highly leveraged asset, he explains the declining cost of debt capital benefits the market.

Gates identifies New York as a major active market. He also points to the following cities as expanding markets: Dallas, Texas; Nashville, Tennessee; Phoenix, Arizona; and Atlanta, Georgia.

He adds that the Carolinas and Florida are still "solid" despite recently having been hit by hurricanes. Gates notes that these areas could be a concern for corporations interested in locating jobs, explaining, "if populations start to decline, then jobs will decline there. If people are still moving there, then I still think you would see jobs going there."

Gates explains that the Pacific Northwest is a slower market as Big Tech companies are not adding many positions outside of AI. The Midwest has also been a slower market, yet, he notes that Chicago has bounced back as its biggest office market.

Many of the companies buying office spaces are looking for newer and nicer amenities, like gyms and rooftops, he tells Yahoo Finance. Gates also stresses the importance of location when companies are buying these spaces to cater to employees' commutes.

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This post was written by Melanie Riehl