Prices for office building nationally continued to slide downward earlier this year, part of a slump that has been ongoing since the outbreak of the Covid 19 pandemic, according to a new study.
The real estate analysis service Commercial Edge notes that overall office building prices declined by 11% between January of 2024 and January of this year. Those figures, combined with a national vacancy rate nearing the 20% mark, present a bleak picture for office building owners.
The average price per square foot for office space, meanwhile, was down to $174 as of the end of last year, a swift drop from the previous year’s $196.
Despite that drop, says the report, Office Utilization Shifts Bring Down Property Valuation, the size of the decline was less than reported in 2023, when prices took a 24% dive.
Class A buildings represented the wildest market last year, seeing a 22% decrease, compared with Class B structures, which only took a 3% hit.
While the price decline in offices buildings located in suburban areas since 2020 has stood at 15%, office buildings in the nation’s central business districts have endured a historic 28% drop during that same period of time.
One of the most reported price declines was witnessed late last year in the $8.5 million auction of a 23-story building at 135 W. 50th Street in New York. The property had previously gone for $332 million, which meant, according to the New York Post, a “97% discount after receiving just one bid.”
The prospect of new office buildings flooding the market, at the same time, appears unlikely: only 44.1 million square feet of new office space was completed last year.
Cities in New York, Texas, and California saw the building of anywhere between 1.8 million and 3.5 million square feet. In the West, new office space totaled 720,000 square feet in Phoenix, followed by Denver’s 710,000 square feet.
February 28, 2025
By Garry Boulard
Photo courtesy of Pixabay
