According to a recent report by the Wall Street Journal, office properties are making a comeback among investors as one of the last major commercial property sectors to rebound from the COVID-19 pandemic. In 2024, U.S. office building sales reached $63.6 billion, marking a 20% increase from 2023 according to MSCI data. While this is lower than the annual average of $142.9 billion between 2015 and 2019, it is still significant as it marks the first year-over-year increase since 2021.
Investors are taking advantage of opportunities in different ways: some are purchasing high-quality buildings with existing debt while others are buying partially vacant towers at discounted prices reported by WSJ . Additionally, there has been an interest in converting obsolete office spaces into apartments and foreign investors have also shown renewed interest in this sector.
Gary Phillips, managing director at Eastdil Secured stated that “people are making their bets” on future market trends and brokers anticipate continued growth due to nearly $200 billion available for investment through opportunistic funds.
One notable example is Norges Bank Investment Management’s purchase of an eight-building portfolio including San Francisco’s iconic property located at405 Howard St., which they acquired for full control with a price tag of $977 million at end-of-year in December.