For maybe a year, the characterization of office markets as a bifurcation between top properties and older ones has been a given. S&P Global Market Intelligence reconfirmed the theory based on an analysis of 2024 Q1 numbers.

The sector continues to get more attention for deteriorating conditions. However, that is an average view that distorts reality, with Class-A and trophy offices on one side and Class-B and Class-C on the other. As GlobeSt.com has previously reported, the upper end of office markets tend to be in much better shape, with lower vacancies and higher rents. The lower end is where the pain exists.

According to S&P Global, the gap between the two markets has only increased over time. The most noteworthy sign is that tenants consider the state of a landlord's balance sheet and willingness to invest capital in building improvements. The former exhibits worry that a landlord is a going concern, which is also an important consideration for lenders. The latter is a statement of wanting a "good" office property to remain so.