National + Office | June 23, 2023

U.S. Office Pricing Not Expected to Recover Until 2040

U.S. office buildings are unlikely to regain their peak pre-pandemic values until at least 2040 as demand for desk space weakens, Bloomberg News reported, citing a forecast by Capital Economics. Values are expected to plunge 35% from the peak by the end of 2025 and take 15 years or more to recover as hybrid and remote work reshape real estate, acccording to London-based Capitol Economics.

“Demolitions and conversions of the worst assets may partially counteract the impact on valuation-based indices,” economist Kiran Raichura wrote. “But ultimately landlords will have to bear those costs, so the road ahead for office owners is set to be an arduous one.”

Major institutional investors, including Brookfield and Blackstone, have defaulted on some office buildings, choosing to stop loan payments rather than spend more on money-losing properties, Bloomberg reported. It’s estimated that office buildings account for $43 billion of $64 billion in potentially distressed assets.

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About Paul Bubny

Paul Bubny serves as Senior Content Director for Connect Commercial Real Estate, a role to which he brings 13-plus years’ experience covering the commercial real estate industry and 30-plus years in business-to-business journalism. In this capacity, he oversees daily operations while also reporting on both local/regional markets and national trends, covering individual transactions across all property types, as well as delving into broader subject matter. He produces 15-20 daily news stories per day and works with the Connect team and clients to develop longer-form content, ranging from Q&As to thought-leadership pieces. Prior to joining Connect, Paul was Managing Editor for both Real Estate Forum and GlobeSt.com at American Lawyer Media, where he oversaw operations at both publications while also producing daily news and feature-length articles. His tenure in B2B publishing stretches back into the print era, and he has served as Editor in Chief on four national trade publications. Since 1999, Paul has volunteered as the newsletter editor of passenger rail advocacy groups (one national, one local).

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