There remains little good news for investors in the office sector, with prices plummeting 11% year over year, low sales volume and limited new building, according to CommercialEdge’s February 2025 office market report.
           
And it is still uncertain whether the office market has hit bottom, as some hoped. “Highly amenitized buildings in desirable locations have likely seen the floor, however, the volume of distressed assets being sold as more buildings’ fate are determined still pose a threat to regional and national averages that we monitor,” commented CommercialEdge director Peter Kolaczynski.
           
The number of office buildings sold at a discount compared to their previous sale price rose from 386 in 2023 to 600 in 2024 – over one-third of all known office sales. The average price of an office building dived from $196 per square foot in 2023 to $174 per square foot in 2024. The 11% fall, however, was less than the 24% recorded in 2023.
           
The deepest slumps were for highly rated properties and those in CBDs, the report found. Class A or A+ properties decreased by 22% in 2024, while Class B properties slipped just 3% year-over-year. Similarly, the average sale price of CBD buildings fell by 28% -- continuing a trend that has seen a 60% plunge over five years. Suburban properties decreased by 15%. However, prices rose 7% for properties within a city center but outside the CBD.
             
“Not all properties have seen values plummet, as the most desirable properties continue to demand premium prices,” the report noted. “Office real estate outlooks expect that this gap will continue to grow as the office market evolves and adapts to the new status quo.”

Sales volume rose $3.2 billion year-over-year to $41 billion at an average of $174 per square foot, down $22. Nevertheless, the report said sales volume remained far below the historic norm.

The national average full-service equivalent listing rate was $33.38 per square foot in January, up 27 cents in the month and 5.8% year-over-year.