Trying to understand the office sector these days is difficult. Tenants aren't sure what their ultimate business models in terms of where employees work will be. Therefore, they don't know how much space they'll need and want short-term leases to give them flexibility. Property owners and operators are understandably concerned that an important basis of their own businesses could disappear. Everything, other than the workers, are trying to figure out how to get employees to want a return to the office.

One of the theories has been a move to quality, in which companies look for upscale properties with amenities that people will find attractive. Except the quality theory isn't so simple, according to Moody's Analytics.

Back in March, the firm published a report saying that Class A office was no longer a safe haven. "For the first time in over a year, Class A urban office performance has hit the skids. Occupied stock, which had been growing steadily in central business districts, sharply declined to end 2022," the report said. Even as Class B and C properties were doing worse, A occupancies have started to do worse.

Continue Reading for Free

Register and gain access to:

  • Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
  • Educational webcasts, white papers, and ebooks from industry thought leaders
  • Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.