The office sector has been the subject of negative headlines in recent months, but experts are quick to point out that these do not tell the whole story. In this series, we will explore various aspects of the industry including debt maturities, opportunities for growth and how building owners are increasing occupancy rates.
According to CREXI’s Eli Randel, many office buildings continue to perform well despite challenges in the market. The perception of this sector may be affected by external factors such as macroeconomic conditions.
Hayim Mizrachi from MDL Group notes that reports about a dying office culture often refer specifically to high-rise buildings in busy cities with long commutes. However, Class A properties remain highly sought after due to their prime location and amenities package.
Aarica Mims from KDC adds that companies prioritize amenities when choosing a new corporate home as employees seek an overall positive experience at work. This is why older buildings may see less demand compared to newer ones with better facilities and convenient locations.
However, some experts argue that older spaces still have value if they undergo repositioning efforts rather than being converted into residential units as suggested by some media outlets. Tony Russo from Lee & Associates mentions successful upgrades made by private owners on Class B+ structures in Chicago’s suburban market which have attracted tenants looking for practical yet appealing workspace options.
Scott Morse with Citadel Partners also believes there is still demand for mature buildings located within close proximity of major business hubs without having all the bells and whistles offered by newer properties at higher lease rates.
Looking ahead, Ira Singer from Mosaic Construction suggests investing in technology upgrades such as AI concierge services or maintenance robots can enhance tenant experience while Petra Durnin with Raise Commercial Real Estate proposes incorporating green spaces or vertical farming features into building design for improved air quality and urban agriculture needs.
In conclusion: While it is true that vacancies have increased within the office sector recently; trophy assets continue to attract tenants and well-located, mature buildings are also seeing interest. The key takeaway is that not all office spaces are created equal and the sector is not doomed for failure as some headlines may suggest.
