- In 2025, more than $4.3 billion was invested in distressed office properties, surpassing the previous 10-year high of $3.8 billion in 2016 and 2024.
- Last year, private buyers represented 55.3% of all distressed office acquisitions.
- A total of 168 properties traded hands in 2025, a 31.3% increase from 2024 and in line with the 10-year average.
- During the same period, the New York City metro area posted $1.1 billion in distressed office investment volume, as buyers sought opportunities in the recovering leasing market.
U.S. office demand declined sharply during and after the COVID-19 pandemic, driven largely by the surge in remote-first work models surged across most U.S. industries between 2020 and 2021. Early business surveys also indicated that firms and workers anticipated that remote work would be long-lasting; as a result, office occupancy fell to historic lows in 2021.
By 2024, employers began to reassess the impact of remote-first models on productivity, collaboration, and corporate real estate use. Hybrid and return to office (RTO) mandates have increased. In addition, Kastle Systems data showed rising office attendance through 2024–2025, with overall occupancy at 54% of pre-pandemic levels and 78% in Class A-plus buildings.
The investment sales market has responded with lower valuations and sale prices, while the number of properties in financial distress has increased. Office buildings began trading at steep discounts, and distressed sales accelerated sharply. Falling valuations and worsening loan-to-value ratios have led to an increasing number of mortgage defaults and, in many cases, assets being taken back by lenders.
Marianne Skorupski
New ownership is increasingly associated with reinvestment and repositioning opportunities.
Across the country, new owners are investing in distressed office properties, improving them, and funding competitive concession packages. In some cases, transactions involve converting outdated or non-competitive office buildings into other property types to better serve communities and municipalities. These dynamics, combined with distressed office transaction volume over the past two years, have set new pricing benchmarks and created opportunities.
Steig Seaward
