Price gaps in the skyline: the premium on quality office trades in the U.S.

graph of major U.S. metros office prices in the top quartile compared to overall office price with the percent of difference from 2002 to 2024
  • The price difference between top-tier office trades and overall office trades offers tremendous insight into the general investor sentiment toward the asset class.
  • Historically, the gap between overall office pricing and the top quartile widens during instances of economic headwinds, which is also when many opportunistic acquisitions were made at highly suppressed valuations.
  • Currently, pricing for the top quartile sits roughly 85% higher than overall office pricing, superseding the 80% delta recorded post-Great Recession in 2009. However, this gap has shown signs of narrowing in recent months as prices in both segments have risen over the same period.
  • As many experts anticipate further interest rate cuts by the Fed, it will be important to monitor these pricing trends closely.

November 13, 2024

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