Office is the cheapest it has been in a decade and the hardest it has been in thirty-five years to add more of. Green Street's office index sits 33% below its 2022 peak, the largest remaining gap of any property type, while 2026 is on track for the fewest US office completions since CBRE started counting in 1990. That combination, a corrected basis today and a frozen supply pipeline tomorrow, is the case for buying office now. It is a case about specific buildings, not about office as a category, and we will say where it breaks.
The short-term case: a basis you could not buy in 2021
You are buying a corrected price. Green Street's Commercial Property Price Index, as of September 2026, had office flat for the month, 33% below the 2022 peak, and up 5% over the trailing year. In April it was down 35%, so the floor appears to have formed and the number is grinding up rather than down. CBRE's transaction-based RCA index, using a different method, puts office closer to 20% below peak. Either way, office took the deepest markdown of this cycle and has the most room to retrace of any sector.
Distress is doing a lot of the pricing. MSCI data reported by The Real Deal in October 2026 showed distressed commercial deal volume up 26.4% year over year through September, with office accounting for 7.8% of deals that involved distress. Marcus & Millichap notes that a meaningful share of recent office trades changed hands well below peak levels. Those sales set the comps, and a building that clears below replacement cost hands its buyer a rent hurdle no new developer can match.
The non-distressed bid is returning too. Colliers, citing MSCI, put first-half 2026 office investment up 14% year over year. Second-quarter volume was $18.5 billion, down 9% from a year earlier, but suburban product held up far better (down 5%) than CBD (down 17%). The money that is moving is moving toward the buildings this thesis is about.
The long-term case: almost nobody is building
Supply has nearly stopped. CBRE reports 2026 completions on track for the lowest annual total since it began tracking the metric in 1990, with 20.1 million SF under construction in the third quarter, about 84% below the second-quarter 2020 peak. Newmark counted 17.2 million SF under construction in the first quarter, a 14-year low. JLL reports that only 7.4 million SF of office broke ground in 2025, below the prior record low of 7.6 million SF set in 2024.
The effect on a buyer is mechanical. Supply this thin cannot respond to demand for three to five years, because that is how long entitlement, financing, and construction take once someone decides to build. And at current rents and construction costs, very little new office pencils, so few people are deciding to build. The existing stock, especially the good stock, has almost no new competition arriving. Scarcity is being manufactured by a starts number near zero, and it is already locked in for the back half of the decade.
Demand moved to the newer building, it did not disappear
The occupier side is quietly healthy. CBRE's third-quarter 2026 report shows net absorption positive for the tenth straight quarter, 63.8 million SF of leasing, and total vacancy down to 18.2%. Kastle's badge-swipe index set a post-pandemic high of a 56.3% weekly average the week of December 8, 2025, touched 66.0% on the peak single day, and has run in the low 50s since, concentrated midweek and in better buildings.
That concentration is the flight to quality. Tenants are consolidating into fewer, nicer floors and paying up for them while older space sits. For a buyer, that is the point: own the building people are consolidating into, bought at a basis set by the buildings they are leaving.
What this looks like in our markets
Phoenix is a story of address, not of metro. Kidder Mathews put third-quarter 2026 total vacancy at 23.7%, essentially flat year over year, with average direct asking rent of $31.66 per SF on a full-service gross basis, up 2%. The headline hides the split. Class A carries the highest vacancy at 28.3% and the highest rent at $34.50; Class C vacancy is 11.1%. Submarket beats metro by a wide margin: Scottsdale Airpark was 8.7% vacant at $40.95, and Scottsdale South was 4.7% vacant at $29.93. The Phoenix office worth owning is not "Phoenix office," it is a specific building in a specific submarket.
Las Vegas is tighter than the national office conversation implies. Colliers put second-quarter 2026 vacancy at 10.8% with 512,774 SF of net absorption, its strongest quarter since mid-2017, and asking rent at $2.79 per SF per month full-service gross. CBRE's series is more conservative, with roughly 177,000 SF absorbed year to date, rent of $2.56, and first-quarter vacancy of 12.0%. We flag that gap rather than blend it, but both series point the same direction, and both describe demand pooling in newer, amenity-rich space.
What we are not saying
We are not saying all office is a buy. The same reports that show a recovery also show 28.3% Class A vacancy in Phoenix and CBD towers that may never fill at the rent on the old pro forma. Green Street warned that if yields stay higher, prices can fall again from here, and office is the most rate-sensitive sector to that move. The case is narrow on purpose: well-located buildings that are leased or credibly leasable, bought below replacement cost, underwritten to the tenant's credit and to a basis the next developer cannot touch. That is a different instruction than "office is back." It is "the right office, at this basis, with no new supply coming, is one of the better risk-adjusted entries in commercial real estate right now."
Sources
- Green Street, "Commercial Property Price Index" (September 2026 reading, office 33% below 2022 peak; prior April reading of 35% below), via Green Street and CRE Daily.
- Bisnow, "Green Street: Falling Commercial Property Prices Are At Or Near Bottom."
- The Motley Fool, "Commercial Real Estate Investing Statistics 2026" (CBRE RCA CPPI, office roughly 20% below peak).
- The Real Deal, "Distressed commercial sales spiking this year: MSCI" (October 21, 2026).
- Marcus & Millichap, "Office Outlook" research brief.
- Colliers / Steig Seaward, "MSCI Q2 2026: Entity Deals Lift Volume as Sector Recoveries Diverge."
- CBRE, "Q3 2026 U.S. Office Market Report" (completions lowest since 1990, 20.1M SF under construction, vacancy 18.2%, 10 straight quarters of positive absorption, 63.8M SF leasing).
- Newmark, Q1 2026 office data (17.2M SF under construction).
- JLL, 2025 office construction starts (7.4M SF, down from 7.6M SF in 2024).
- Kastle Systems, "Back to Work Barometer" (56.3% weekly peak, December 8, 2025).
- Kidder Mathews, "Phoenix Office Market Report, Q3 2026."
- Colliers, "Las Vegas Office Market Report, Q2 2026"; CBRE, "Las Vegas Office Figures Q2 2026."
Frequently Asked Questions
- Is office really a good investment again?
- For the right building, yes. Office is the most repriced major property type, down 33% from its 2022 peak per Green Street, and new supply has nearly stopped, with 2026 completions on track for the lowest since 1990 per CBRE. The case is specific to well-located, leasable buildings bought below replacement cost, not to office as a category.
- Why does low office construction matter to a buyer?
- Thin supply cannot respond to demand for three to five years, the time entitlement, financing, and construction take. With 2026 completions the lowest since 1990 and starts near record lows per JLL, the existing good stock has almost no new competition arriving, which supports occupancy and rent on what you already own.
- Is everyone back in the office?
- No, but attendance set a post-pandemic high. Kastle's badge index hit a 56.3% weekly average in December 2025 and has run in the low 50s since, concentrated midweek and in better buildings. US net absorption has been positive for 10 straight quarters per CBRE, with demand flowing to newer space.
- What is the risk in buying office now?
- Price could fall further if yields stay high, which Green Street has flagged, and office is the most rate-sensitive sector. Class A vacancy in Phoenix was still 28.3% in Q3 2026, and some CBD towers may never fill at old rents. The risk sits in the wrong building at the wrong basis, not in the thesis itself.
- How do the Phoenix and Las Vegas office markets look?
- Both split by address. Phoenix metro vacancy was 23.7% in Q3 2026 but Scottsdale Airpark was 8.7% and Scottsdale South 4.7%, per Kidder Mathews. Las Vegas was tighter overall, with 10.8% vacancy and its strongest absorption since 2017 in Q2 2026, per Colliers.