In the evolving commercial real estate landscape, the office sector is showing signs of stabilization and selective opportunity. As return-to-office trends gain momentum and institutional capital begins to reengage, disciplined investors may find value in well-positioned assets. This educational piece explores the rationale for considering office investments, drawing on current market dynamics and insights from experienced operators like The Wideman Company.
This content is for informational purposes only and does not constitute investment advice—real estate investments are speculative, highly illiquid, and involve substantial risk, including the possible loss of principal.
Current Market Context for Office Real Estate
The office market has faced significant headwinds in recent years, including remote work shifts, elevated vacancies, and valuation resets driven by higher interest rates. However, recent data indicates the sector may have reached a turning point. National vacancy rates have begun to stabilize and show modest improvement in some periods, with forecasts pointing to further progress in 2026 as net absorption turns more consistently positive and supply remains constrained. (1)(2)
Key trends shaping the 2026 outlook include:
- Flight to Quality: Demand is concentrating in Class A and premium spaces, where leasing activity has strengthened and absorption has been positive in many markets. Coastal gateway cities and select Sun Belt locations are seeing renewed interest. (1)
- Supply Constraints: New construction is at historic lows, with the pipeline representing only a small fraction of inventory. This limited supply supports potential rent growth in high-quality assets, particularly in transit-accessible central business districts (CBDs). (3)
- Return-to-Office Momentum: Corporate mandates continue to drive higher attendance, supporting leasing in well-located, modern properties. Markets with strong job growth in tech, finance, and professional services are benefiting most. (1)(4)
- Valuation Dislocations: Significant price declines from recent peaks have created entry points below replacement cost in many cases. Investment activity is expected to increase as capital flows toward stabilized, amenity-rich properties. (3)(5)
While recoveries remain uneven—favoring prime assets over secondary or suburban spaces—these dynamics suggest selective opportunities for investors with patience and operational expertise.
Looking Beyond the Headline: Rethinking Office Vacancy
The headline figures that dominate the news cycle around office deserve a more disciplined review. Aggregate vacancy statistics, while directionally useful, often obscure the structural realities within the asset class.
Take vacancy rate as a primary example. A market reporting 25% vacancy is immediately characterized as distressed or fundamentally impaired. But that figure, viewed in isolation, lacks context.
In our view, roughly 25–35% of existing office inventory in many major markets is functionally obsolete. This includes assets with inefficient floorplates, limited natural light, inadequate HVAC systems, poor vertical transportation, insufficient parking, weak amenity offerings, or suboptimal access to transit and surrounding retail. These buildings may technically be classified as “available,” but in practical leasing terms, they are non-competitive without substantial capital reinvestment or repositioning.
When that obsolete tranche is isolated from the data set, the vacancy profile of the remaining competitive stock changes meaningfully. The effective vacancy rate within institutional-quality, well-located, amenitized assets is materially lower than the headline suggests.
This dispersion is the core of the “flight to quality” dynamic.
Leasing activity is disproportionately concentrated in the top quartile of product in buildings that offer:
- Efficient, flexible floorplates
- Strong access to transportation nodes
- Integrated food, fitness, and collaborative amenities
- High environmental and wellness standards
- Modern infrastructure capable of supporting hybrid work demands
Tenants are not abandoning office altogether; they are reallocating demand toward better buildings. In many markets, absorption in Class A or trophy products has been positive even as aggregate market absorption remains negative due to persistent vacancy in aging inventory.
The implication is clear: office is no longer a homogeneous asset class. It is bifurcated.
Capital and tenancy are flowing toward quality, while obsolete inventory faces prolonged vacancy, conversion pressure, or permanent impairment. Investors who evaluate the sector solely through top-line vacancy metrics risk missing this structural divergence.
The more relevant question is not “What is the market vacancy?” but rather:
- What percentage of inventory is truly competitive?
- How is leasing velocity distributed across quality tiers?
- What capital is required to reposition non-competitive stock?
- Where is tenant demand actually concentrating?
When those questions are asked, the narrative becomes more nuanced and in certain submarkets, considerably more constructive.
Insights from Experienced Operators
The Wideman Company, which acquired RealtyMogul in November 2025, sees compelling potential in the office sector for 2026. With nearly 50 years of experience navigating market cycles, the firm focuses on acquisitions where institutional retrenchment has led to pricing resets, enabling entry at materially reduced basis while prioritizing execution.
This disciplined approach emphasizes:
- Substantial reserves for capitalization to support targeted improvements.
- Proactive asset management to enhance leasing velocity, tenant experience, and adaptability to hybrid work models.
- A focus on fundamentals, such as CBD locations with strong transit access and modern features, where return-to-office trends are driving occupancy gains.
Spotlight on a Recent Platform Opportunity: Truist Plaza in Orlando
A practical illustration of these dynamics is the recent offering on the RealtyMogul platform: Truist Plaza, a newly constructed 28-story Class AA mixed-use tower in downtown Orlando’s CBD. Delivered in 2019, the property features over 200,000 square feet of office space (91% occupied with a 4.6-year WALT), integrated retail amenities, a 180-room AC Hotel by Marriott with a rooftop terrace and bar, a 547-space parking garage, direct SunRail access, and a Walk Score of 91. Anchored by Truist Bank on a long-term lease and ENERGY STAR certified, it benefits from strong local fundamentals in a market showing leasing momentum in Trophy/Class A space, steady asking rents, and growing investor confidence despite broader challenges.
In Orlando, positive indicators, such as increased leasing activity in premium properties and limited new supply, position high-quality assets like Truist Plaza for resilience and potential upside as market conditions improve.
Risks and Considerations
Transparency requires acknowledging the challenges in office investing:
- Economic Sensitivity: Downturns can lead to higher vacancies if businesses downsize or delay expansions. Office-using employment remains tied to broader economic conditions.
- Vacancy and Lease-Up Risks: Re-leasing can take time if tenants depart, potentially extending hold periods. National vacancy may remain elevated in some segments despite overall improvement.
- Management Intensity: Office properties require active oversight, including tenant improvements and building compliance. Operational costs can increase during vacancies or repositioning.
- Market Bifurcation: Performance differs sharply between Class A and lower-tier assets; older or less desirable properties may face ongoing pressure or obsolescence.
- Interest Rate and Financing Risks: Borrowing costs can impact leveraged deals, though a more stable rate environment in 2026 may offer relief.
Investors should evaluate tenant creditworthiness, lease durations, location fundamentals, and sponsor experience. Consulting financial, tax, and legal advisors is essential to assess personal risk tolerance.
Looking Ahead: A Disciplined Approach to Office Opportunities
The office sector’s recovery in 2026 is likely to be gradual and selective, rewarding focus on quality, alignment, and long-term stewardship. We remain committed to providing access to opportunities that reflect current realities, such as conservative entry pricing, durable fundamentals, and meaningful alignment. While no investment is without risk, the combination of valuation resets, constrained supply, and emerging demand drivers positions office as a viable component of a diversified portfolio.
RealtyMogul appreciates the trust investors place in us and looks forward to sharing updates on enhancements and new offerings throughout the year.
(1) Cushman & Wakefield, U.S. Office MarketBeat Q4 2025
(2) Colliers, U.S. Office Market Statistics | Q4 2025
(3) CBRE U.S. Real Estate Market Outlook 2026 – Office chapter
(4) Colliers: U.S. Office Market Outlook Report | Q4 2025
(5) Marcus & Millichap: 2026 U.S. Office Investment Forescast
This article is for informational purposes only, and is not a recommendation or offer to buy or sell securities. Information herein may include forward looking statements and is for informational purposes only. Forward-looking statements, hypothetical information, or calculations, financial estimates and targeted returns are inherently uncertain. Past performance is never indicative of future performance. None of the opinions expressed are the opinions of RealtyMogul. Advice from a securities professional is strongly advised, and we recommend that you consult with a financial advisor, attorney, accountant, and any other professional that can help you to understand and assess the risks and tax consequences associated with any real estate investment. All real estate investments are speculative and involve substantial risk and there can be no assurance that any investor will not suffer significant losses. A loss of part or all of the principal value of a real estate investment may occur. All prospective investors should not invest unless such prospective investor can readily bear the consequences of such loss.
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