Why the Commercial Office Market Isn’t One Market Anymore

For years, the advice on office real estate has been simple: stay away. But that advice misses what’s happening in the commercial office market right now, and treating it as one market is exactly the mistake investors need to stop making.

During a recent episode of Your CPA’s Take on Real Estate, Daniel Roccanti shared valuable insights on how commercial office properties are performing today. The discussion highlighted the importance of looking past the headlines and understanding that office isn’t one category anymore, it’s two very different ones.

Two Markets, Not One

As Daniel put it, “office is not one market. There’s two markets in office. One’s doing pretty good. The other one’s doing absolutely horrible and that’s what’s making the news.”

That distinction matters more than most investors realize. A newer, well located office building with strong amenities is performing well. An older building without those amenities is struggling to attract tenants at all, and it’s the struggling half that dominates the coverage.

What Sets the Winners Apart

According to Daniel, the difference comes down to what tenants are choosing. Newer, well positioned buildings with strong amenities are doing well, while older buildings that require significant capital to compete are being left behind. Remote work plays some role, but the bigger factor is that when employees do come back to the office, companies want to bring them into a space worth coming back to.

What This Means If You’re Buying Office

Daniel’s advice for anyone considering an older office building is to start with one question: “Hey, if I’m going to buy this building, I need to understand why would my tenants choose this building?”

If the honest answer is that tenants wouldn’t choose it as is, the next question is what it would cost to change that. Bringing an outdated property up to a standard where tenants want to lease space needs to be built into the numbers before the deal is signed, not discovered after.

This is where opportunity can hide inside a sector everyone else has written off. A building that looks risky on paper because it’s office can still be a strong buy if the capital and the plan are there to reposition it. The properties to avoid aren’t office buildings in general, they’re the specific buildings that can’t compete for tenants and won’t be fixed by a rate cut.

Preparing for What Comes Next in Office

The broader commercial real estate story right now is one of price discovery and deal by deal decision making rather than sector wide bets, and office is the clearest example of why. Sorting properties into “office” or “not office” tells an investor almost nothing useful. Sorting them by location, amenities, and tenant demand tells them everything.

For investors willing to look past the sector label, the current split in the office market creates a real chance to buy well positioned assets at a discount, or to reposition an older property before the rest of the market catches on.

Want the full breakdown of where commercial real estate lending stands today, including multifamily, industrial, and retail? Watch the full episode of Your CPA’s Take on Real Estate above.

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