Office Absorption: A New Chapter for CRE Investors

As a commercial real estate (CRE) investment sales broker specializing in retail, healthcare and office properties, I’ve seen the ups, downs, and everything in between when it comes to the office market. For some time now, the narrative around office spaces has been one of uncertainty. Headlines about high vacancy rates and remote work dominating the corporate landscape have painted a less-than-rosy picture. However, recent trends suggest a shift is underway, and it’s one worth paying attention to.

A Glimmer of Optimism

According to recent reports from Fast Company, office absorption—a key metric that measures the net change in occupied office space—is beginning to show positive momentum. While there are still significant numbers of office spaces sitting vacant, the tide seems to be turning (source: Fast Company, read more). Companies are reevaluating their long-term strategies for office use, and many are finding that having a physical workspace still holds immense value. As highlighted in Fast Company, some companies are leveraging innovative redesigns to create collaborative environments that foster creativity and employee engagement, underscoring the enduring relevance of physical offices. This shift isn’t just good news for office landlords but also for CRE investors looking for opportunities.

What’s Driving the Change?

1. Hybrid Work Models: While remote work isn’t going away, hybrid models are becoming the norm. Companies are redesigning their office spaces to accommodate collaboration, innovation, and employee engagement—activities best done in person. This has led to a demand for modernized spaces that cater to these needs.
2. Flight to Quality: Tenants are prioritizing Class A properties with state-of-the-art amenities and sustainability certifications. Older, less competitive properties are facing challenges, but this also presents an opportunity for investors willing to reposition or redevelop assets.
3. Economic Growth: As economic conditions stabilize, businesses are regaining confidence to expand their footprints, particularly in markets with strong talent pools and infrastructure.

What This Means for Investors

For those of us in the CRE space, these trends signal a period of recalibration rather than decline. Investors who adapt to the changing demands of office tenants will find opportunities to create value. Here are a few strategies to consider:

• Focus on High-Growth Markets: Secondary and tertiary markets with growing populations and business activity are seeing an uptick in office demand.
• Embrace Adaptive Reuse: Repurposing outdated office buildings for mixed-use, residential, or other purposes can unlock hidden value.
• Stay Data-Driven: Understanding local market dynamics, including tenant preferences and economic drivers, is key to identifying winning opportunities. 

Looking Ahead

The office market is evolving, and while it may not look like it did pre-pandemic, its importance in the CRE landscape remains undeniable. For sellers, this is a time to highlight the unique strengths of their properties. For buyers, it’s an opportunity to acquire assets at favorable pricing while positioning them for future growth.

At the end of the day, real estate is about adaptability—something our industry has proven time and again. Whether you’re buying, selling, or simply keeping a pulse on the market, the positive trends in office absorption are a reminder that opportunities always exist for those willing to find them.

If you’re looking to discuss how these trends could impact your investment strategy or want to explore office acquisition opportunities, I’d be happy to connect. Let’s navigate this evolving market together and uncover the potential it holds.

Justin Langlois, CCIM is a Commercial Real Estate Advisor with Stirling Investment Properties servicing Baton Rouge, Louisiana and surrounding markets. Please reach out to Justin to discuss your real estate investment strategies.