CORFAC Members See Positive Signs In The Office Sector

The office sector is showing evidence of revitalization after a long pandemic-driven slump, according to the findings of a CORFAC International survey during the first half of year. 

Sixty-seven percent of respondents reported an uptick in deal activity in the first six months of 2025. This was a sharp increase from the year prior, when just 34% of respondents reported an increase in activity. Respondents linked heightened deal activity to positive employment and migration trends as well as stabilizing interest rates. 

Even with 72% of the U.S. remote-capable workforce reported to be back in the office full-time or hybrid, the market still faces headwinds. High construction costs, inflation and national policies are among the top concerns for the industry. 

Each market has its own upsides and downsides. To gain perspective on the changing market aspects and their regional nuances, Bisnow spoke to CORFAC members across the U.S. and UK. 

Class-A Absorption Across The U.S. And UK

Joe Latina, SIOR, managing principal of LMT Commercial Realty/CORFAC International in Wilmington, Delaware, said the Northern Delaware office market is beginning to show signs of steadying after several years of turbulence. 

“Wilmington’s central business district is still lagging slightly behind the city’s suburban offices; however, the newly announced purchase of two buildings by global biopharmaceutical company Incyte has given the city a much-needed boost,” Latina said. 

Incyte purchased the two buildings, formerly owned by Bank of America, for $47M in Q2. Bracebridge I at 1100 N. King St. in Wilmington totals 372K SF, and Bracebridge III at 1100 N. French St. totals 145K SF. Due to the buildings’ considerable size, this purchase and Incyte’s occupancy reduced Class-A vacancy in the city substantially, from 30.5% to 20.9%. 

Other significant leases signed in the past year include AmeriHealth, Caritas Delaware, McDermott, Will & Emery and Charles Schwab.

While return-to-office initiatives have been key to an office occupancy turnaround, Joel Meyer, SIOR, principal of Intelica/CORFAC International in St. Louis, sees another dynamic coming into play. 

“The pursuit of strong workplace culture and top talent is now the primary factor influencing Class-A tenants,” he said. “This mindset is ensuring that Class-A space remains the most resilient and desirable segment of the market.”

He pointed to several large Class-A transactions in the beginning of Q2, including Caleres Inc. relocating to two Class-A office towers in Clayton, Missouri, occupying a total of 140K SF, and SFW Partners moving from a Class-B location in Des Peres, Missouri, to the Class-A 721 Emerson building in Creve Coeur, Missouri. 

Across the Atlantic, Charlie Thompson, managing partner of Farebrother/CORFAC International in London, said the office market is thriving. 

Investment in UK office assets grew by 27% in the second quarter, with the Central London submarket seeing the most traction. Leasing reached 3.1M SF in Central London during the first half of the year — a 5% uptick year-over-year. This is a promising signal for the rest of the region.  

Effects On Class-B and C Office Spaces

The positive momentum is not as evident when it comes to lower-quality office space, however. 

Many companies that are in the market for office space are seizing the opportunity to move into highly amenitized Class-A office buildings at a discount, Latina said. To stay relevant, building owners may need to reenvision their offerings into something that differentiates them from the market at large.

“It’s unsurprising that incentives such as free rent, concessions for space customization and more flexible lease terms are facilitating tenants’ transition into superior-quality spaces,” Meyer said. “Market pressures are high, and landlords are offering these perks to secure and retain desirable tenants.”

Amenities Are Key

Tenants are approaching properties with high expectations, requiring property owners and managers to make their assets more attractive to current and prospective tenants. 

According to Thompson, more properties are installing and promoting desirable amenities such as rooftop terraces, tenant lounges, bike racks and workout facilities. Other important amenities include thoughtfully designed and hospitality-driven interiors. 

Latina added that property owners should be embracing new technology tools like applications that monitor and control vital building systems, such as security systems.

“This creates a greater sense of comfort and safety not only for the tenants and their workers, but it’s a more proactive way for management to deal with issues as they arise on the spot,” Latina said. 

Investors Getting Back In Action

Latina said that across the board, investors are generally a bit more optimistic about the office market, especially when it comes to Class-A assets.  

Total office space available for lease has steadily declined since Q3 2024, according to Cushman and Wakefield. The issuance of CMBS loans tied to office assets hit $11.4B in Q1 2025, the highest quarter since 2007 and more than triple that of Q1 2024. This signals that lenders have a sense of renewed confidence in the sector as financing becomes more affordable. 

However, there are still some major setbacks the industry has to overcome. 

National office vacancy hit 20.7% during Q2, with San Francisco and New York reaching 27.7% and 23%, respectively. Nearly 150M SF of office space has been proposed to be converted to alternative uses. And while these conversions may be a beneficial strategy for the greater industry, they can be costly, face zoning restrictions or run into structural impediments that can prevent conversions altogether.

On the other hand, in the St. Louis market, local investor activity is seeing an uptick as risk remains too high for many large institutional investors, Meyer said. 

In the UK, investors have appetite — if the price is right, Thompson said. 

“The office investment market is persistently difficult,” he said. “There are a lot of investors and funds looking to sell their assets and not hitting the figures they need.”

Capital is plentiful, but the challenge is finding the right discounted price that will entice investors to act, Thompson said.

From an investment standpoint, opportunity may exist for buyers who were priced out of office in the past by institutional investors. But the right advice is essential to weigh factors such as price, local market trends and timing to make a sound and informed investment decision, Thompson said.

This article was produced in collaboration between CORFAC and Studio B. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.