Recent Article That the Office Market May Be Rebounding!

In an article written by Joe Gose and published in the New York Times 4/14/25, sales of office buildings across the country are up 21% from 2023. CBRE reported that in 2024, 6.5 million ore square feet of office space was leased than was vacated. In major higher-cost cities the average asking rate of $65/rsf was up 17% from the previous year, according to JLL. Last year average sales price for U.S. office properties fell only 11%, as compared with the 24% decline in 2024. Office investors are out buying, taking advantage of short sales and discounted loans that allow them to pay 20-40% of what the same property would have sold for in 2019. “Not all office properties are experiencing revived demand.  Lower-end buildings are still struggling, which could be a threat to hundreds of banks and investors in real-estate-backed loans.” Prime office assets had an average vacancy rate of 15.3%, while nonprime office properties averaged 19.2% vacancy rates. “In higher-cost markets, landlords of newer buildings offered an average of 9.3 months of free rent and one-time, tenant improvement allowances of $99 per square foot in 2024, JLL said.”  Between the amortized value of the tenant improvements and the free rent, even over a ten-year lease term this is a huge net income reduction to the landlord but most likely beats not doing the deal…