Why Office Pricing and Fundamentals Don’t Match Up

Muoio: “Trophy or major-metro office assets provide this store of value, while still yielding higher than many other products and having a greater chance for price appreciation.”

IRVINE, CA—Despite slow recovery, modest vacancy improvement and tepid rent growth, office prices are robust, Ten-X’s chief economist Peter Muoio tells GlobeSt.com. As we recently reported, the firm’s August Office CRE Nowcast posted the strongest gain for the third consecutive month, rising 5.8% from July and 13.3% above its year-ago level, which is oddly juxtaposed against still-tepid fundamentals including vacancy rates. We spoke exclusively with Muoio about the factors causing this juxtaposition and what could potentially derail the office sector.

GlobeSt.com: How do you account for the juxtaposition of office pricing and office fundamentals?