Five years after the pandemic upended workplace habits, office real estate remains one of the most scrutinized segments of private real estate, with headlines often emphasizing vacant properties and falling values. Yet a recent analysis from Meketa argues that the reality on the ground is far more differentiated than the broad narratives suggest.
According to Meketa, performance across the office sector now varies widely. Some buildings are securing record rents, while others are facing significant leasing and valuation pressure. Certain urban cores have managed to regain momentum, whereas other downtowns are still working through questions about their long-term role and identity in a hybrid work environment.
The firm notes that many of the sector’s structural challenges were taking shape even before 2020. Investors and owners were already contending with the growth of coworking platforms, evolving employee expectations for workspace, and heightened competition from newer and often less capital-intensive property types. The pandemic accelerated these pressures and forced a reevaluation of the office’s purpose in the workday.
Where office space once served primarily as the default place where work was performed, it now competes directly with remote and hybrid arrangements for employees’ time. At the same time, high capital expenditures, leasing costs, and tenant improvement requirements are prompting investors to reconsider whether traditional office warrants a long-term, permanent place in core real estate allocations.
Meketa suggests that treating office as a single, homogeneous asset class is a fundamental error for capital allocators. Local economic drivers, demographic patterns, and company workplace policies all influence how individual assets perform. Two seemingly comparable buildings, even within similar markets, can have sharply different leasing outcomes and value trajectories, and different cities are recovering at very different speeds.
This fragmentation is creating a more complex investment landscape. Some assets are positioned to outperform and attract premium rents, while others are likely to need repositioning or even repurposing to remain competitive. Markets that appear challenged today may stabilize or recover faster than expected as employers and workers settle into new patterns of office use, while other locations may continue to lag.
For investors, the central task is no longer just predicting when the office sector as a whole will recover. Instead, it is about identifying which specific assets, localities, and capital structures can succeed in a world where office usage is discretionary rather than mandatory. Meketa characterizes this period of disruption as one that, like prior cycles of change, can generate compelling opportunities for those able to differentiate between future winners and potential underperformers within the office universe.
