Discounted office sales are piling up across the country, signaling that distress in the sector is deepening rather than easing. According to the latest data from Yardi Matrix, nearly half of the office properties that have sold so far this year have traded below their prior valuations, despite mounting hopes that interest-rate cuts might provide some relief.
In 2021, only about 20% of office deals closed at a discount. By July 2025, the share had more than doubled to 46%. Even with expectations of a 25-basis-point rate cut in September, as tracked by CME’s FedWatch tool, borrowing costs are unlikely to fall far enough to rescue many troubled loans, Yardi said.
To measure the extent of pricing declines, Yardi analyzed more than 3,200 office properties that had at least two historical sales to compare. Of those, 1,359—or about 42.5%—were resold at lower values since the start of 2023. The steepest discounts were concentrated in major urban markets, with Houston leading at 69%, followed by San Francisco at 67%, Manhattan and Washington, D.C., both at 64%, and Dallas at 61%. These same metros also logged the strongest sales activity for A-Class buildings.
Class distinctions tell a surprising story. Roughly 71% of A or A+ Class properties have seen price declines since 2023, compared with 38% of B-Class buildings and just 19% of C-Class assets. That runs counter to the prevailing narrative that top-tier properties would better withstand market strain, while lower-quality offices bear the brunt of valuation losses.
Central business districts, still reeling from remote work patterns set during the pandemic, have taken the hardest hit: 70% of CBD office properties sold at a discount since 2023. Suburban offices fared better, with 39% of sales closing below prior pricing.
Yardi expects discounts to persist as long as weak tenant demand and elevated interest rates weigh on the market. With loan maturities approaching and lenders increasingly reluctant to extend terms on underperforming assets, distressed sales are likely to mount. Buyers willing to take risks—either chasing deep discounts or investing in costly office-to-residential conversions—stand to benefit most.
Nationwide listing rates for office space averaged $32.72 per square foot in July, up 3.3% from a year earlier, while vacancies remain high at 19.4%. Among the country’s key markets, Manhattan posted the highest listing rate at $67.97 per square foot, down 4.7% year-over-year with a 15.2% vacancy rate. San Francisco followed at $59.12, down 3.7%, with 26.3% vacancy. Miami, which continues to attract tenant demand, saw one of the sharpest gains, at $57.30, up 15.1%, with a 14.3% vacancy rate.
Other key markets included Boston at $52.83 per square foot (up 11.0%, 16% vacancy); the Bay Area at $51.55 (down 4%, 23.9% vacancy); Austin at $45.61 (up 8.2%, 27.2% vacancy); Washington, D.C., at $41.31 (up 2.1%, 19.6% vacancy); Los Angeles at $41.11 (up 0.8%, 14.5% vacancy); Atlanta at $35.66 (up 11.4%, 19.9% vacancy); and Seattle at $35.22 (down 4.5%, 27% vacancy).
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