The Death of the Office?

Despite efforts on the part of many employers to bring workers back to the office, office buildings are now the most distressed segment of the commercial real estate market.

1 minute read

July 24, 2023, 8:00 AM PDT

By Diana Ionescu @aworkoffiction

Large empty office building floor with white walls and grey carpeting

russell witherington / Adobe Stock

Move over, dead malls: there’s a new troubled kid in town. “According to a new report by MSCI Real Assets analyzing the commercial real-estate sector, around $24.8 billion of office buildings in the U.S. were in financial distress by the end of the second quarter — surpassing both retail (which includes malls) and hotels,” explains Clio Chang in Curbed.

“As remote work continues to force companies to cut back their real-estate footprints, the MSCI report showed that the measure of offices in distress was up by 36 percent since the first quarter. Meanwhile, the country’s overall office-vacancy rate is at 20 percent.”

While housing advocates tout office vacancies as an opportunity to convert these centrally located buildings to housing, it remains to be seen if that idea can overcome the costs and logistical challenges of adaptive reuse.

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