America‘s Commercial Real Estate Show Could the Office Sector Be Changing? with Phil Mobley
Jun 19, 2025
Phil Mobley, National Director of Office Analytics at CoStar, shares his expertise on the shifting office market landscape. He discusses the contrasting recovery in cities like Manhattan versus struggles in Los Angeles and Chicago. The conversation highlights stagnating rental rates amid inflation and the resurgence of office leasing activity post-pandemic. Phil also addresses the increased cybersecurity challenges in a remote work environment and the strategic differentiation needed to navigate this 'alpha market' successfully.
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Fragmented Office Market Recovery
- The US office market is fragmented, with recovery mainly in New York City while other major markets struggle.
- This split creates varying performance and recovery speeds across the country.
Rents Stagnate but Top Tier Gains
- National office rents are flat nominally but declining in real terms after inflation.
- Top-tier buildings see some rent growth boosted by higher TI packages, while struggling submarkets face rent declines.
Vacancy Up but Quality Space Shrinks
- National office vacancy rates rise above 14%, the highest in history, but demand has stabilized recently.
- Relevant competitive office space supply is shrinking, tightening options for tenants seeking quality locations.