For a while, some voices in CRE have been raising a counterpoint to the dirge that office as a class is doomed. A doom loop? Not quite. That maybe the issue is a lack of the right types of properties.
A recent analysis by Jim Costello, executive director of research at MSCI, falls into a similar vein. The basic point: not all office buildings are the same and while worst-case scenarios are possible, they are unlikely to be everywhere.
At the heart of this view is the variability of price contraction. Overall, the office market has taken a significant hit. The RCA Commercial Property Price Index (RCA CPPI) for the segment in the fourth quarter of 2023 was down 16% from the same period in 2022. Sales of offices in that quarter were 66% below the five-year fourth quarter average before the pandemic. In other words, prices haven't fallen enough for the market to clear.
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