The commercial office sector is currently facing challenges, but there may be a light at the end of the tunnel. One project Calloway Title recently closed on at 201 E Main St, Murfreesboro, TN, serves as proof. Despite U.S. office values dropping to 25% below their 2022 peak over the last two years, industry experts see early signs of a turnaround. They believe today’s bear market could present a unique investment opportunity where commercial real estate investors can purchase high-quality office space at a much lower rate.
With doubts surrounding the office sectors’ recovery, Barry DiRaimondo, Co-Founder and CEO of SteelWave, says, “You can convince yourself that it’s going to take ten years or longer to absorb all the vacant space. Now, historically, that never is what happens.”
The market moves in cycles. Right now, the office sector is at the bottom. Still, in this article, DiRaimondo and other professionals agree a “hockey stick” recovery, where the market rebounds from its current low point, is likely on its way.
Return-to-Office Policies
This theory is supported by the increase in back-to-office mandates happening nationwide. It was widely believed that the post-pandemic era would see a permanent shift to remote work. Yet, recent findings suggest otherwise. According to a study by B2B Reviews, 90% of companies plan to implement return-to-office policies by the end of 2024, in either a full-time or hybrid capacity. Hybrid work situations won’t affect the need for office spaces. This article explains, “If you’re required to work three days a week or four days a week, you still need the same amount of office space because people are still coming into the space.”
Opportunities for Investment
Increasing demand for space and solidified return-to-office policies aren’t the only factors making now an interesting time to invest. Other factors include:
- Low Entry Prices: The current bear market offers entry points at significantly discounted rates, attracting both seasoned investors and newcomers. “After years of tabling some deals or sticking to the sidelines, a growing pool of private buyers, owner-users, local firms and smaller asset managers are scooping up properties at a fraction of their previously traded prices,” says this CoStar article. Smaller investors have access to properties that were once out of reach, while large firms seek properties with premium features and amenities to attract employees.
- Leasing Momentum: CoStar also explains, “Developers and landlords are reporting an uptick in tours and leases that, in some cases, echo activity seen before the pandemic.” In addition, companies like Kroger and IBM have also shown a willingness to commit to long-term leases, providing stability to landlords. “The turnaround in leasing follows several years of companies trying to figure out where and how employees want to work — and how much space they need to accommodate those shifts.”[1] [2]
- Market-to-Market Variability: The recovery is nuanced and varies by region. For instance, some regions in Tennessee outperform others due to factors like tech sector growth and increased job opportunities.
Calloway Title Closes Tennessee Office Building
Our team’s recent closure of a major deal at 201 E Main St, Murfreesboro, TN, is a prime example of capitalizing on current market conditions. We completed the title work and helped close the entirety of the Class B office building. With over 60,000 square feet and multiple tenants, it is strategically located near public transportation and boasts ample parking, making it an attractive proposition for tenants and investors.
Calloway Title is headquartered in Georgia, but top developers and investors nationwide trust us to close deals like this one. Learn more about the office building at 201 E Main St. here. If it’s the right time to invest or develop office space in your local market, we’d love to help you navigate the complexities of this sector and close the deal. Visit www.titlelaw.com to work with us!
