Signs of Office Market Recovery

On the surface, America's office real estate slump looks about as bad as it's ever been. Real-terms prices for US office floorspace are where they were during the depths of the global financial crisis. Delinquencies on office mortgage-backed securities are even higher, at record levels. But dig a little deeper and something fascinating is happening - American office supply is now actually shrinking. About twice as much office space will be demolished or converted to residential real estate this year as is actually completed. The oversupply is being bitten away at, piece by piece. It will not be a rapid rebound, but combined with a shift in financing from banks to different forms of private credit, things appear to be at a turning point. My piece this week on the beginning of the end for America's office crisis. https://lnkd.in/giHdv942

“You can’t time the bottom perfectly…” But when global funds, seasoned developers, and institutional investors start quietly buying again—it's not noise. It's signal. After four tough years, the U.S. office market is showing signs of real traction: 📈 Sales volume jumped 21% last year. 🏢 Net positive leasing hit a 5-year high. 📍 Premium locations in NYC, Austin, and Silicon Valley are seeing double-digit rent gains. 🛠️ Distressed assets are being picked up for pennies—by buyers who play the long game. This isn’t about flipping. It’s about owning value and riding the next cycle with confidence. It reminds me of a core principle I share with my clients: The best opportunities don’t come when everyone feels good. They come when the smart money quietly moves while everyone else hesitates. I’ve said it before—wealth doesn’t come from perfect timing. It comes from having a strategy, a clear set of goals, and trusted partners. And if you're watching the market wondering “Is it still too early?”... Ask yourself: What would you rather be—early and informed, or late and reactive? What do you think—is now the time to explore long-term opportunities in commercial real estate?

CRE lending. Strong headline: "Commercial real estate delinquencies notched their first sequential decline since 2022 in the second quarter as banks continued to clean up problem loans in the office and multifamily sectors." "The delinquency rate for commercial real estate loans declined 6 basis points from the first quarter to 1.52%, according to data from S&P. The pace of year-over-year increases for the sector has consistently slowed since peaking at 58 basis points in the second quarter of 2024 and falling to 12 basis points in the second quarter this year." "US office market performance steadily improved from 'peak nervousness' 1-2 years ago," BofA Global Research said in a note on Aug. 22, with rents stabilizing in many markets even as vacancy rates inch higher." "Criticized loans, which include loans flagged for signs of weakness in addition to those that have already missed payments, have declined across banks in each of the first two quarters this year." "CRE loans across banks were up 0.5% sequentially and 1.1% from the year prior during the second quarter, according to data from Market Intelligence. Year-over-year growth rates neared or exceeded 10% across 2022 and into early 2023." "The number of banks exceeding regulatory guidance for CRE concentration fell for the ninth consecutive quarter in the second quarter, with a sequential drop of 26 banks to 375." https://lnkd.in/ephE-U9A