Commercial Brokers & Property Managers NAICS 531210

Dec 16, 2025 - Outlook for Office Demand Remains Cloudy

• The US office market’s recovery remains uneven amid high vacancy rates and declining property values in some markets, according to The Wall Street Journal. While districts like New York’s Park Avenue and San Francisco’s South of Market show signs of strength, most markets struggle with empty space due to structural shifts from remote and hybrid work. Companies are downsizing footprints, leaving landlords, lenders, and local governments under pressure as office-related tax collections fall. Some investors remain cautious, with office property sales far below pre-pandemic levels, though conversions to housing and limited new supply are tightening prime space in select areas. With AI-driven job cuts adding uncertainty, analysts warn the slump may not mirror past cycles, raising questions about the long-term viability of traditional office demand.
• Commercial real estate remains out of favor with investors, who have been burned by falling property values, even as the Federal Reserve has repeatedly cut rates, according to The Wall Street Journal. Institutional buyers, once the backbone of the market, have reduced their allocations as returns have lagged far behind those of equities, infrastructure, and commodities. US property values remain 17% lower than their 2022 peaks, with offices and apartments hit the hardest, according to Green Street. While opportunistic firms like RXR and Blackstone are acquiring discounted assets, many investors are hesitant to invest in refurbishments. Amid the demise of cheap debt and the assumption of rising property values, income generation from property is becoming increasingly important, shifting the focus to assets such as senior housing, retail, and high-quality offices. With construction costs up more than 40% since 2020, the limited new supply could drive rent growth.

• Retail landlords are entering 2026 with cautious optimism after a strong third quarter, reversing earlier declines tied to bankruptcies, tariffs, and weak sentiment, according to The Wall Street Journal. In Q3, retailers entered 5.5 million more square feet than they vacated, according to data firm CoStar. Discount chains such as Dollar General, Aldi, and 7-Eleven drove demand, while construction remained historically low, keeping the Q3 vacancy rate at 4.3%. Although closures from bankruptcies pushed store shutdowns up 11% in the first three quarters of 2025 compared to the same period in 2024, landlords are finding higher-paying tenants. Online sales growth and flat inflation-adjusted retail spending have slowed rent gains, but analysts say consumer resilience will remain if the labor market holds steady.
• Mounting real estate foreclosure and repossession activity could spur demand for commercial real estate brokers. Real estate foreclosure starts and repossessions increased in the third quarter of 2023, according to Attom's Q3 Foreclosure Market Reports. In Q3, US foreclosure starts increased 16% compared to the third quarter of 2024, and repossessions climbed 33% over the same period. Attom's CEO Rob Barber said, "In 2025, we've seen a consistent pattern of foreclosure activity trending higher, with both starts and completions posting year-over-year increases for consecutive quarters. While these figures remain within a historically reasonable range, the persistence of this trend could be an early indicator of emerging borrower strain in some areas." States with some of the most foreclosure filings in the third quarter included Florida, Nevada, and South Carolina.