While much of the office building sector struggles to adapt to high interest rates, inflation and reduced demand due to hybrid work, a top tier of office buildings is thriving. Rent premium for prime office space increased to 84% during the first quarter and vacancy rates were 14.8%, 4.5 percentage points lower than the rest of the market, a gap that has widened from 1.9 percentage points in mid-2018.

Continued demand for prime space and a shrinking construction pipeline mean prime rents will continue to rise and command a premium over non-prime space, according to an analysis of office markets in 57 U.S. cities conducted by CBRE. The trend underscores a preference for new, high-quality buildings that appeal to employees and increase office attendance.

The study identified 830 properties that fit this top echelon of office buildings, representing just 2% of U.S. office buildings. About 60% of these buildings were constructed in the past decade, while the rest have recently undergone extensive renovations. Prime buildings have quality design, wellness standards, a strong mix of amenities and are in walkable neighborhoods near retail and transit.

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

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