The commercial office market is showing a shift in tenant preference, as stabilizing demand and a severely limited supply of premium Class A and trophy office space are forcing renters to consider second- and third-tier (Class B and C) buildings.
Change in Performance
Over the past five years, Class B and C office properties bore the brunt of reduced demand, experiencing significant occupancy losses. However, CoStar data indicates that in the third quarter of the current year (Q3 2025), occupancy losses in these lower-tier buildings came to an abrupt halt, suggesting a potential market turnaround.
Driving Factor
The recovery is fueled by the fact that the supply of premium, top-tier office space suitable for large tenants is rapidly shrinking. As available large-block spaces in trophy buildings dwindle, major occupiers have fewer choices than at any point since office vacancy began to rise.
Implication
This rediscovered interest in second- and third-tier properties could mark the beginning of a longer, deeper recovery for these “non-trophy” assets, as tenants with limited options are forced to broaden their search criteria. Learn More>>>
About CORFAC International – New York
CORFAC International – New York, an extension of CORFAC International delivers over 90 years of Expertise for Commercial Real Estate in the Greater NY Metro Area. Comprised of a partnership of WCRE & Chilmark Real Estate Services, CORFAC International – New York provides practical guidance, analyzes crucial transaction details for optimal workspaces and deals, by leveraging market knowledge to drive client success. As committed advocates, we deliver measurable results, serving global clients with expert advisory and property management. We match your dedication with proven expertise.
