Office Sales Volume Declining In-Step with Interest Rate Hikes

As the U.S. economy emerged from the pandemic-induced recession, office sales volume began to improve in the second quarter of 2021 and into the first quarter of 2022. Lately, however, in the wake of the Fed’s multiple interest rate hikes and the subsequent tightening in financing rates, those sales volumes have begun to drop off again.

The situation has been compounded by the weaker than expected return to office trends after Labor Day. Office investors remain uncertain about when and if a full comeback might occur, as working from somewhere other than the office has become the norm for over half of U.S. corporate employees...

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RSK: It is not only interest rates but also the work from home or remote location that is a driving force. It seems to start with fewer leases being written which has a direct effect on the value of a building. And some owners do not want to or cannot sell at that valuation.