The commercial real estate market continues to experience volatility as US office values are 25% below their 2022 peak. However, SteelWave Co-Founder, Chairman and CEO Barry DiRaimondo believes this bear market could be a great investment opportunity.
"You’ve got two sides of the equation. You’ve got the capital market side, which drives values. And then you’ve got supply and demand, which drives leasing. And they’re both a mess, candidly, at the moment," DiRaimondo explains. He notes that as the institutional capital world stays away from the office sector, "you can convince yourself that it’s going to take ten years or longer to absorb all the vacant space. Now, historically, that never is what happens." He adds that the office market tends to recover in a "hockey stick" shape and believes the market is currently at the bottom.
As some companies allow employees to work from home, he notes that hybrid work situations won’t affect the need for office spaces: "While there are some tech companies that have embraced the work-from-home environment, there’s other ones that are clearly moving back to the more traditional with a little bit of a hybrid piece of the equation. But you know, if you’re required to work three days a week or four days a week, you still need the same amount of office space because people are still coming into the space."
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