Why Offices Are Hot Again

Commercial real estate in the U.S. is entering a new chapter, five years after the onset of the pandemic upended office occupancy and investor confidence. “The big story of 2025 so far, five years post pandemic, five years post the reset, and demand is back,” said Liz Hart, president of Leasing for North America at Newmark, in an interview with AInvest.com . “Particularly in places like New York City. It's back at pre pandemic levels.”

Hart’s assessment comes as cities like New York and San Francisco experience a resurgence in demand for quality office space. The sector had been hobbled by remote work, elevated vacancy rates, and investor uncertainty. But as Hart noted, “from an office perspective, it's much more optimistic than it was.

📺 The office rebound in NYC, San Francisco, and other major cities

That optimism is not evenly distributed across the market. “It really depends on the type of asset you're talking about in the specific location, because not every story is the same in commercial real estate,” she added.

One segment outperforming expectations is the so-called trophy market—Class A properties and post-2019 construction. “The trophy market has been performing exceptionally well, as you've probably read about,” Hart said. “Especially post-2019 construction in every major city, particularly New York, performing excellently.” But she also emphasized the opportunity in older buildings that may need repositioning. “There's a lot of opportunity in the real estate market, especially as demand's coming back for assets like the one you're in that are just going to require a little bit of repositioning.”

Driving some of the rebound is renewed tech sector demand. “The technology industry went from being, you know, about 12% of the total US demand to almost 20% in the last year,” she said. That uptick is fueling interest in creative office spaces and refurbished infrastructure.

Part of the shift back to office is behavioral, according to Hart. “It's behavior at the end of the day,” she said, comparing the transition to returning to the gym after a break. “We're five years past this big reset that we had to all work from home because it was necessary at that point in time. And now it's just like, what's our new behavior?”

She added, “The office is a great place for collaboration and innovation. And I think particularly businesses that are trying to do transformation in the face of AI and economic changes that are happening right now, it's good for people to be face to face.”

At the same time, local policy decisions could influence the trajectory of the recovery. Asked about a proposed increase in commercial real estate taxes by a New York City Mayoral candidate Zorhan Mamdani , Hart was cautious but clear. “What's happening at a local level from a planning perspective and a tax perspective is exceptionally important as it relates to attracting business and retaining business,” she said. “We had a very similar tax policy… in San Francisco… where there was a commercial real estate tax on rents. And it did lead to several companies leaving the city that have not yet returned.”

Despite the risks, Hart remains confident in New York’s resilience. “San Francisco and New York are incredibly resilient because of the demand that they have that is going through there, the financial services industry, the technology industry, and that does make them more resilient,” she said. But, she added, “that doesn't mean they won't suffer if there's certain policies that are gonna be pushing business away.”

The recent surge in foreign investment underscores that resilience. “There is a lot of foreign investment that's been coming into the market in the U.S., especially in the past year,” Hart said, referencing a recent Wall Street Journal Saudi Arabia's Public Investment Fund investing hundreds of millions of dollars into a Manhattan skyscraper alongside developer Related Cos. “There certainly were a couple of investors who are early movers that I think will be taking advantage of that and having a great return in a couple of years when they're able to exit.”

As the industry continues to evolve, Hart sees this moment as transformative. “I think there's probably something around like, you know, five years post pandemic commercial real estate is showing resiliency as it defines a new chapter,” she said. “We've redefined that new chapter and… there's a lot of opportunity ahead.”

📺 “The worst thing you can do is keep doing what works.”