: US Office Market: have we already reached the bottom?

After four challenging years for the office market in the United States, marked by Covid-19 and subsequently rising interest rates, the market has reached an inflection point. The available supply has been decreasing since the beginning of last year due to increased leasing activity and a significant reduction in lease renewals. Consequently, net absorption turned positive at the end of last year. Furthermore, the acceleration of return-to-office (RTO) policies is encouraging. Finally, investment and liquidity are improving, with offices benefiting from heightened interest from investors regarding allocation intentions. However, this exit from the crisis is being called into question by measures from the new Trump administration: i / net absorption has turned negative again in Q1-25 due to massive federal lease terminations, ii/ tariffs are expected to weigh on growth and the labor market, iii/ the questioning of the dollar's status as a safe haven poses a significant risk for offices, whose valuations are heavily dependent on 10-year Treasuries. Moreover, the office market in the United States, like its European counterpart (see Don’t throw performing office districts with the bathwater for more details), is experiencing increasing polarization by city and within those cities. We propose a scoring grid by A-class city to identify the best investment opportunities in offices: Miami, Nashville, Boston, Dallas, or New York appear to be the most interesting for capitalizing on a rebound. Conversely, San Francisco, Chicago, Detroit and Washington D.C present the highest risks among grade A cities.