Cheap office sales rising
Coverage reports that U.S. office towers are trading for a fraction of their former values, creating a lower-cost acquisition environment for potential repositioning. The pattern suggests more buyers could find the numbers to attempt office‑to‑residential conversions, though each building’s layout and capital needs still matter. (newser.com)
U.S. office towers are increasingly changing hands at steep discounts, with some buildings selling for more than 90% below prior prices. (newser.com) One Chicago office building spanning 485,000 square feet sold for $4 million after fetching $68.1 million about a decade earlier. In Denver, the two-tower Energy Center, which sold for $176 million in 2013, was bought out of foreclosure for about $5.3 million. (newser.com; therealdeal.com) The discounts are concentrated in weaker buildings, not the entire market. Newser’s summary of Wall Street Journal reporting said poorer-quality offices and less desirable locations have taken the biggest hits, while prime properties in parts of New York City and San Francisco are still drawing profits. (newser.com) The backdrop is a U.S. office market still carrying record-high vacancy after the pandemic changed work patterns. The National Association of Realtors said in February 2025 that office vacancy remained at record highs at the end of 2024 even as demand improved in some metro areas. (cms.nar.realtor) Cheap purchases can make redevelopment math work in ways that were impossible at 2019 prices. Brookings said in March 2025 that office-to-residential projects have been slow partly because owners, tenants, and lenders still disagree on what many older buildings are worth. (brookings.edu) That pipeline is getting larger. CBRE said on June 2, 2025 that 23.3 million square feet of office space in the 58 largest U.S. markets was slated for demolition or conversion in 2025, versus 12.7 million square feet of new office construction, and it tracked another 81 million square feet in future conversion plans. (cbre.com) But not every cheap tower can become housing. CBRE said successful conversions depend heavily on building size, floor plate shape, and financing costs, while Brookings said zoning rules and market uncertainty still slow projects in many cities. (cbre.com; brookings.edu) Cities are also changing rules to make more of these deals pencil out. New York City Comptroller Mark Levine’s office said on July 17, 2025 that 44 completed, ongoing, and potential office-to-residential conversions totaled 15.2 million gross square feet as of the first quarter of 2025 and could produce about 17,400 apartments. (comptroller.nyc.gov) Distress is still building. MSCI data cited by Newser and The Real Deal showed distressed office sales reached $808 million in January and February 2026, up 24.5% from a year earlier. (newser.com; therealdeal.com) That leaves buyers with a narrow opening: acquire an obsolete office cheaply enough, spend heavily on reconstruction, and hope the finished apartments or mixed-use space earn more than the tower ever could as an office. (brookings.edu; cbre.com)
