Reichle Klein Group’s 2025 Year-End Office Market Overview

The Reichle Klein Group year-end 2025 survey of the Toledo, Ohio office market found market fundamentals modestly improved from year-end 2024, reinforcing the view that the bottom of the cycle has likely passed. While challenges remain, the market exits 2025 in a measurably better position, supported by declining vacancy, positive net absorption, and disciplined supply conditions.

The overall vacancy rate declined over the course of 2025 as occupied square footage increased in both halves of the year. Net absorption turned positive, reversing the modest losses recorded at the end of 2024 and confirming that stabilization observed earlier in the year carried through the second half. Importantly, these gains occurred in a market with no new office construction and limited sources of new supply, allowing incremental leasing activity to translate directly into improved occupancy.

Leasing activity during 2025 was characterized less by expansion and more by repositioning. Our agents report a clear flight to quality, with most new leases involving users already in the market who are taking advantage of tenant-favorable conditions to upgrade the quality of their space or relocate to better buildings. This dynamic continues to produce meaningful movement within the market without generating substantial rent growth. Return-to-office initiatives are also contributing to higher in-office utilization, giving tenants greater confidence to move forward with lease decisions that had previously been deferred.

At the same time, supply-side adjustments are quietly reshaping the market. Residential conversions of office space are occurring across the downtown area, both in long-mothballed buildings such as the Nicholas Building and the Spitzer Building, which have not been tracked in the competitive inventory for years, and in properties that were previously marketed as office space. The owners of the Tower on the Maumee recently announced plans to convert the fifth through twelfth floors of the building to apartments, following an earlier residential conversion of the upper floors. These projects reduce competitive office inventory and help improve market balance without relying solely on demand growth.

Submarket performance remains uneven, with higher-quality buildings and well-located assets capturing the bulk of leasing activity. Meanwhile, older and less functional properties continue to struggle. Having stated this, the picture is not entirely bleak. With vacancy moving lower, absorption positive, no new construction underway, and inventory slowly rationalizing through conversion, the Toledo office market enters 2026 on firmer footing than it has seen in several years. Whether these early gains can be sustained bears watching.