How Much Are Office Buildings Worth? A Scary Amount Less Than They Used To

A new analysis from Trepp suggests that the concerns many CRE owners and investors have had about office property valuations may have been overly optimistic. Working through an examination of CMBS office-secured loans — because there is publicly available data, unlike privately transacted loans — the firm estimated that the average total loss ran from 52% for construction after 2000 to 60% for pre-1950 buildings.

The firm looked at CMBS office loans with 2023 maturities, including ones that have already matured. The full value of the 2023 maturities was $22.9 billion, with $14.5 billion yet to mature. Of the full list, 16.2% (45) were built before 1950, 26.4% (161) between 1950 and 1980, 32.6% (447) between 1980 and 2000, and the remaining 24.9% (364) from 2000 on. The biggest portion of value, $7.5 billion, was in the 1980 to 2000 vintage. The 45 pre-1950 buildings had a total value of $3.7 billion.