Has US Office Investment Recovered from the Financial Crisis?

A decade after the financial crash, COMMERCIALCafé analyzed the U.S. office investment realm, identifying the key markets, players and lending trends that characterized activity in this sector from 1997 to 2017.

It’s been nearly 10 years since the financial crisis hit U.S. real estate like a sledgehammer, effectively putting the brakes on the loose credit spending and regulation that brought it about. The residential market took the biggest hit, with homeowners losing their properties to foreclosures and big financial players such as Lehman Brothers going bankrupt. While the commercial sector didn’t come out of the downturn unscathed, either, it never really crashed in the same way as the housing market did.

Sister publication COMMERCIALCafé wanted to see the impact the recession had on U.S. office investment, and conducted an analysis of the market from 1997 to 2017, using detailed Yardi Matrix data. What they found was that, following a period of recovery, office sales activity has been on the rise starting 2010, and reached a post-downturn high in 2015–a high very close to the 2007 pre-recession peak. Manhattan was the most active market in terms of office transactions both before and after the financial crash, with investor interest actually strengthening after 2008. The Bay Area recorded the highest increase in office sales volume in the decade following the recession, a trend fueled by the market’s emergence as a tech Mecca. 

Tishman Speyer, the most active office buyer from 1997 to 2007, vanished from the spotlight after the financial crash. The top buyer in the decade that followed the recession proved to be JPMorgan Asset Management, which purchased $10.8 billion worth of office assets during that time. 

To see which markets fared the best following the financial crisis of 2008, which were the key players trading properties and how the office sales realm has evolved as a whole from 1997 to the present day, read the full story on the COMMERCIALCafé blog.