Discussion about the office sector is often dominated by remote work, flight-to-quality and interest rate headlines, but industry practitioners are increasingly focused on a different set of questions that could shape performance and capital flows over the next cycle.
On the leasing and workplace side, NAI Hiffman's Jim Adler argues that owners should be asking whether their buildings are truly "AI-ready," both in terms of supporting a technology-enabled workforce and enabling tenants to attract and retain AI-focused talent. JLL's Amanda Kross notes that artificial intelligence, geopolitical shifts and supply chain realignment are prompting companies to rethink which roles sit in which markets, even as most office commentary lags that strategic reassessment.
CBRE's Anna Squires Levine highlights the importance of workplace friendships, pointing to research that close relationships are a key predictor of employee engagement and that some workers will accept lower pay to work with friends. She suggests owners and occupiers examine how their environments foster these ties. JLL's Katy Redmond adds that while prime Class A and trophy space is constrained, retrofitted Class B properties with the right deal structures and upgrades may quietly be capturing demand, particularly in suburban-metro locations that align with talent and cost objectives.
On the investment side, Van Vlissingen & Co.'s Gordon Lamphere emphasizes that neighborhood quality often outweighs in-building amenities, as employees commute for safety, walkability and nearby services more than for on-site perks. Harbor Group International's Michael Nathan points to U.S. office markets where negative headlines have depressed investor appetite, yet individual assets with solid fundamentals and reset basis levels may present compelling equity and lending opportunities for disciplined buyers.
Financing dynamics are another underexplored pressure point. HKS Real Estate Advisors' Michael Lee suggests the focus should shift from calling the bottom in values to understanding what characteristics and capital stacks lenders will actually finance today, including leverage, recourse, repayment terms and execution certainty. Transwestern's Wes Wallace raises whether compressed returns in other property types could redirect capital back to office, and whether wide spreads between cap rates and borrowing costs position certain office assets to navigate a higher-for-longer rate environment, particularly at the top of the market.
Several experts spotlight structural and valuation issues. Allen Matkins' Spencer Kallick questions who will own and recapitalize the next generation of office assets, especially after a pronounced flight to quality and reinvestment in Class A. CLA's Carey Heyman underscores the lag between current office values and municipal tax assessments, noting that many owners face elevated tax burdens just as they confront refinancing in a higher-cost environment and rising expectations for turnkey space.
Crexi's Adam Siegel flags the risk embedded in long-term pre-2019 CBD leases that have yet to roll, warning that cash flows could reset sharply as they reprice to current market rents and encounter lengthier lease-up periods and higher tenant improvement costs. He also notes that some buildings may become "dead weight" if vacancy spikes and conversion to alternative uses proves infeasible. Finally, Heitman's Daniel Vickerman questions the continued reliance on pre-capital NOI as the primary valuation input, arguing that ignoring ongoing capital expenditures may obscure risk and contribute to mispricing in the office sector.
