Yes, there's a K-shaped market for office space

Companies leased more office space than they released for the third quarter in a row. Premium office buildings with strong amenities are leasing exceptionally well, especially in major cities where trophy-class space is scarce. Older buildings and suburban offices show a more mixed performance, with a widening gap between top-tier and bottom-tier properties. COVID-19 accelerated this split, creating a K-shaped office market. More older office space is being demolished or converted into apartments or hotels, reducing the supply of traditional office inventory. Hybrid work patterns also shape demand, with many employees working part-time in offices and part-time remotely.

"Companies leased more office space than they let go of for the third quarter in a row, according to a new report from NAIOP, the Commercial Real Estate Development Association."

"You'd be hard pressed in a lot of big cities to find what we would probably call Type A or Trophy Class space to be available, he said. But he said that isn't true of the office market as a whole. When you look more towards older buildings, ones that maybe don't have as many amenities, or perhaps are out in suburban locations, there the market's a little bit more mixed, Selvitelli said."

"We have kind of a top tier that is performing very well, and then we have a bottom tier that's performing much worse, he said. A K-shaped office market to go with our K-shaped economy. What is new in recent months is that more of those older, less-desirable office buildings are getting knocked down or converted into apartments or hotels. We're removing more office spaces than we're building."

"The future is a lot of hybrid, so a lot of folks going in say, three days a week, working at home for two, probably less fully remote, he said. And probably as much fully in-person as we've ever had."

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