Conventional wisdom in the post-pandemic office sector has centered on a flight to quality, with many assuming that newer Class A towers would outperform older space across the board. HqO CEO Chase Garbarino argues that the picture is more nuanced, contending that how a building is operated now matters more than its vintage or class label.
Garbarino points to Dallas as an example, where trophy Class A assets are reporting vacancy of 12.7% while lower-tier Class A properties in the same market exceed 28% vacancy. In his view, the common thread among underperforming buildings across all classes is an overreliance on lagging indicators such as occupancy, lease expirations and NOI. By the time those metrics flag a problem, he says, it is often too late to change a tenant’s decision.
Instead, HqO’s data indicates that higher-performing assets are those where landlords closely track how tenants use space, how often employees come in, whether engagement is trending up or down, and how occupants feel about the workplace over time. These insights allow operators to adapt building operations to real usage patterns rather than relying solely on physical quality or static amenity packages.
Programming is a key differentiator. On high-traffic days, Garbarino notes that leading landlords expand food and beverage offerings, prioritize shared-space bookings and create opportunities for tenants to interact. On lighter days, they shift toward productivity support, maintenance work and smaller-scale events. He adds that in-office socializing has nearly doubled since the pandemic, and that the most engaged employees place greater value on learning and social connection than on solitary work.
As a result, buildings with the strongest utilization tend to be those that treat the tenant community as an asset to curate, with offerings like speaker series, wellness events, cross-company networking and shared experiences that are difficult to replicate at home. Garbarino describes the lease as the entry point, while the day-to-day experience determines whether tenants and employees stay engaged.
He also sees the office leasing model itself evolving, albeit unevenly. Citing Leesman data, he says nearly half of senior corporate real estate leaders identify flexible space and lease terms as their largest unmet need, while more than half of executives report that tenants are actively seeking shorter terms for new or renewed leases. Average new lease sizes have fallen 32% from pre-pandemic levels.
Garbarino argues that flexibility is a symptom of a deeper shift: tenants are looking for an ongoing relationship rather than a purely transactional contract. He notes that firms such as Tishman Speyer and Boston Properties are pursuing flexible product strategies to meet that demand, but stresses that shorter leases alone do not solve the problem without operational models that can serve tenants at varying commitment levels and convert engagement into long-term retention.
On office demand, he says return-to-office mandates are only part of the story. CBRE data cited by Garbarino indicates that hybrid work is now permanent for roughly 80% of occupiers, and average occupancy remains 25% to 40% below pre-pandemic benchmarks. The buildings closing this utilization gap fastest, he says, are those that deliver an experience that is clearly better than working elsewhere.
He adds that many leading owners now track a Tenant Health metric that blends utilization, engagement and sentiment to act as a leading indicator of renewal risk. As an example, he points to One Culver in Los Angeles, a 325,000-square-foot office campus that increased occupancy despite a 28% vacancy rate in its submarket and subsequently underwent a $500 million recapitalization at a valuation more than triple its acquisition price.
Looking ahead, Garbarino believes the sector is moving toward a membership-style model in which landlords treat tenants as participants in a platform rather than counterparties to a lease. In that model, he says, success depends on experience infrastructure that supports tenant relationships across renewals, expansions and cycles, and he expects early adopters to gain an advantage as market conditions evolve.
