Understanding Demand Shifts in Office Markets

The office market isn’t dead. But it’s not coming back the way most people think. What’s really happening? A massive flight to quality. Companies still want office space, but they want the best of the best. Let’s look at the data. 1. Leasing activity is surging in top-tier buildings. ↳San Francisco (+50%), Manhattan (+18%), Dallas (+11%). 2. Sublease supply is shrinking. (-3.8%) ↳A sign that companies are locking in premium spaces, not abandoning them. 3. Vacancy rates are breaking records in Class B and C properties. ↳While Class A towers remain fully leased. What does this tell us? Hybrid work is here to stay. But employees will only come in for: ✔️ Cutting-edge infrastructure (tech-enabled, sustainable, and flexible) ✔️ High-end amenities (think rooftop lounges, fitness centers, concierge services) ✔️ Collaboration-first layouts (goodbye, cubicles, hello, experience-driven workspaces) And the biggest losers in this shift? ❌ Investors betting on "business as usual" instead of adapting. ❌ Landlords clinging to outdated assets who can’t afford renovations. ❌ Companies stuck in second-rate spaces while competitors attract top talent. So, if you own or invest in office space, the message is clear. Premium is the only path forward. If you’re holding outdated assets, you’re already behind. If you’re investing in trophy buildings, you’re ahead of the curve. Because the office market isn’t dying. It’s evolving. Winners will double down on quality, experience, and innovation. Everyone else? They’ll be left behind.

🏢 Is the Office Market Finally Stabilizing Post-Pandemic? After years of uncertainty, we’re finally starting to see some clarity in the office sector. But does that mean recovery, or just a new reality? 📊 What’s Changing in 2025? 🔹 Flight to Quality Continues – Class A space is in demand, while older, under-amenitized buildings struggle. 🔹 Hybrid Work is Here to Stay – Companies are right-sizing, not eliminating, office footprints. 🔹 Leasing Activity is Gaining Momentum – Businesses are making long-term decisions again. 🔹 Distress is Driving Opportunity – High vacancy rates in certain markets = value-add plays for investors. 🚀 What’s the Strategy? ✔ For Investors: The biggest opportunities are in Class A buildings at a discount and repositioning older assets. ✔ For Tenants: Leverage the market now to secure long-term leases with incentives before demand rebounds. ✔ For Owners: Upgrade or adapt. Flex space, amenities, and experience-driven workplaces are the new standard. The office market isn’t dead—it’s evolving. Those who understand the shift and adapt will be the ones who win in this cycle. ➖➖➖➖➖➖➖➖➖➖➖➖ “Think Big. Act Smart. Invest Boldly.” ➡️ I’m Logan Freeman, the #KansasCity #CRE Guy. 👉🏽 I can help you sell, buy, or invest in CRE in KC. 🫱🏾🫲🏼 Let’s talk, meet, and figure out how I or my team can help. #CRE #OfficeMarket #WorkplaceTrends #CommercialRealEstate #Investment #MarketShift

DFW - Quick Office Market Update DFW's local economy remains resilient amidst current economic challenges. Tenant demand is shifting towards more heavily amenitized buildings, with a focus on leasing less space to attract employees back to the office. Good news on the sublease front - the rate of new sublease supply being added is now being surpassed by transactions and natural expirations. In line with the flight to quality, Class A rental rates are on the rise, while Class B buildings are facing headwinds. Additionally, new construction activities are slowing down due to the impact of interest rates on capital markets. Cushman & Wakefield #DFW #OfficeMarket #EconomicUpdate

🏢 The Office Market Paradox: Why Both Bulls and Bears Are Right Two major industry reports caught my eye this week - #MMQB's optimistic outlook for office furniture and Phil Kirschner Kirchner’s comments on Bloomberg's warning of a "year of reckoning" in commercial real estate. The office market is at a crossroads: One side predicts booming investments, the other warns of a reckoning. What if both are true? Let’s break it down. 1. The Quality-Quantity Shift Companies are shrinking total office space but spending more per square foot. Rows of basic workstations are being replaced by premium collaborative zones and tech-enabled spaces. Result: Simultaneous cost reduction and increased investment. Ryan Anderson has coined the mission in front of us as creating the environment, process, and culture that helps employees reattach to the workplace. 2. A Tale of Two Markets The market is diverging: Cost-cutters: Downsizing and slashing budgets. Destination creators: Transforming offices into vibrant hubs that attract talent. It's no longer one market—it’s two moving in opposite directions. 3. The Renovation Reality Even budget-conscious landlords are being forced to invest to: Accommodate hybrid work setups. Meet stricter sustainability mandates. Stay competitive amid evolving tenant demands. The Risk Factor Financial stress in commercial real estate is a growing concern: Rising delinquencies could stall renovations. Potential foreclosures might disrupt even the most forward-thinking plans. Summary 2025 won’t favor optimists or pessimists—it will reward those prepared for both contraction and expansion. Success means staying agile, tracking renovation and financial health trends, and adapting to a market in flux. What trends are you seeing in your local market? Are you gearing up for cost-cutting, reinvention, or both? #CommercialRealEstate #WorkplaceStrategy #OfficeDesign #HybridWork #FutureOfWork #RealEstate #ContractFurniture #CRE #MarketAnalysis MillerKnoll IFMA CoreNet Global #futureofwork #hybrid #rto #returntooffice