Would 2022/23 be a good time to purchase Class B/C office space?
"Outside of the office sector, which is lagging behind as employers allow increased remote work flexibility to keep and attract talent, commercial real estate continues to strengthen."
"While the overall office market is wobbly, some variance exists depending on location. We've seen improvement in some midsize markets as companies seek more affordable office locations away from major U.S. cities."
What to make of this? Would 2022/23 be a good time to purchase Class B/C office space? First time potential buyer here (Texas).
Link: https://www.nar.realtor/newsroom/commercial-real-estate-market-expected-to-grow-despite-rising-interest-rates
[{"id": "iathfut", "text": "For the right price? Sure. \n\nOk I\u2019m done being a wise guy. Look, I\u2019m a CRE appraiser who specializes in office in one of those midsized market they reference. I can tell you in the two markets I cover for my company, the Class A stuff has done better in absorption in the recovery than B and C. When I first heard the term \u201cflight to quality\u201d I called BS, but it\u2019s definitely quantifiable at this point in my markets. Class B and C has struggled more. If you buy a B building for the right price and can put some money into it to tell a great story (amenities, upgrades to HVAC for COVID conscious tenants, etc.) you probably can make some money, but you\u2019re going to need to buy right to make sure you have the flexibility to upgrade it. Happy hunting for that asset.", "replies": [{"id": "iatt1h0", "text": "Thanks for the insight! The thought process for tenants (imo) is if you can\u2019t get into class A space for your employees, then wfh or coworkimg in class A is the next best alternative. Especially for tech firms, the workspace is a selling point for talent. If you\u2019re gonna make them come to the office it better be a nice one. I think wfh sort of slots in before class b and c if it works for the business and operations.", "replies": [], "depth": 2}, {"id": "iaum4ga", "text": "We are seeing the same flight to quality in Chicago. Buildings that were A+/A even 5 years ago are losing tenants to the A+ buildings built in the last few years. Ten-year-old office towers that sold in the sub-5 cap in 2018 would sell for 7% today", "replies": [], "depth": 2}], "depth": 1}, {"id": "iau617u", "text": "There is no such thing as a bad time to buy real estate.\n\nOnly a bad time to sell.", "replies": [{"id": "iavrvvr", "text": "Big fan of the sentiment in general, but definitely feel the PTSD it could cause anyone seeing this who bought leveraged RE in like 2005-2007 \ud83d\ude1e", "replies": [{"id": "iaw7eln", "text": "I bought leveraged RE in 2005 - 2007.\n\n(I also bought some stuff in 2008, 2009 and 2010....before they finished falling in price...much from people walking away).\n\nThey all paid rent the entire time between then and now.\n\nThey're worth 4 times what I paid for them.\n\nLost no sleep the entire time.", "replies": [], "depth": 3}], "depth": 2}, {"id": "iaxl9ti", "text": "I always subscribe to \"you make money when you buy real estate, not when you sell it\" (this is implying the opposite of what you are saying)", "replies": [{"id": "iayw8oz", "text": "There is that as well.  Smart people buy well but, even if you don't, in most cases, you can't get hurt on real estate if you sell well and, you manage well.\n\nI've bought at the top of the market (paid \"too much\"), but I bought that real estate for my business.  So it didn't matter to me that I paid too much because, I had been outgrowing my corporate rental property for 12 years, moving 3 separate times so....every time I moved, it cost me a bundle; new cat 5 or 6 (or 7) wiring, new letterhead (back in the day when we printed letterhead), new envelopes (\"*oh shit...they moved again*\"....\"*hey...we sent that check to the last address you gave us...sorry*\"), occasionally employees didn't want to make the move to the new locations....etc.\n\nA million expenses aside from the rental cost or...the purchase price.\n\nAnd 20 years later, because we bought 5 times more than we needed at the time we never had to move again and, it later sold for 7 times what we paid for it.\n\n Bought poorly based on some criteria....but it sold well.\n\nOther times, we bought well, and then the market slowed....yet rents continued to rise and  increasingly pay the cost of holding while renting that asset out to others.  So....no cost to hold....incremental value increases....and in time, substantial increases due to other factors.\n\nWhile you control the purchase and the sale, you can't control the peak.\n\nYou can control when you sell.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "iawe66z", "text": "Yes, No, Maybe?", "replies": [], "depth": 1}]