Data storage system employing file space reclaim without data movement

A data storage system operates to shrink an intermediate logical volume and lower file system upon deletion of a first upper data unit of an upper file system without moving file data on the physical storage devices. Initially, a second upper data unit of the upper file system is identified that is mapped to an end location of the intermediate logical volume. Within the lower file system, a non-end location of the volume file is re-mapped to a first location on the physical storage devices where the data of the end location of the intermediate logical volume is stored. Within the upper file system, the second upper data unit is re-mapped to the non-end location of the intermediate logical volume. Subsequently, the intermediate volume is truncated by removing the portion at the non-end location.