Office Reports

Distress in the office market persists with over $260 billion in office loans maturing and a growing delinquency rate.

As of May this year, there have been 600 office sales, an increasing number of which are being sold at discounts.

In March, several markets had average DSCRs below 1.0, including Brooklyn (0.81), Chicago (0.90) and Cleveland (0.96), CommercialEdge shows.

Office sales continued to wane in Q1 2024 as companies embraced remote and hybrid work and re-examined their office footprints.

As the office market navigates trends shaping the sector in recent years, we anticipate an uptick in distress activity and discounted sales.

The 2024 office market outlook suggests an increase in these discounted sales, driven by high rates and reduced demand.

The U.S. office market has logged $33.8 billion in office sales for 2023, at a yearly average of $196 per square foot.

Demand for office space is down, expenses are up and values have dropped, while maturing loans continue to pressure the sector.

About 31 million square feet of new office space began construction in 2023, nearly half of the starts from the last two years.

The volume of loan maturities is concerning as weaker demand, rising costs and lower property values squeeze office owners while banks and investors reduce exposure to offices.