T
he office sector continues to struggle with high vacancy rates, reaching 20.1% in this year's third quarter, according to Moody's. This is largely due to the shift towards remote work brought about by the pandemic, which has left many offices underutilized and some cities with an oversupply of space.

    However, despite these challenges, the outlook for the office sector is improving, driven by a surge in leasing activity and a decline in new construction. Real estate investment trusts specializing in office properties have seen their stocks rise 28.5% this year, outperforming the S&P 500. Michael Acton, head of AEW Research, believes that good times are ahead for the office market, citing upticks in leasing in cities like Boston and New York.

    Acton notes that vacancies are no longer getting worse and that a new equilibrium has been reached. Leasing activity is up, growing 0.4% in this year's third quarter compared to the previous period. Office real estate is also at its cheapest point in over a decade, making it an attractive investment opportunity for patient investors.

    The trend towards remote work may be slowing down, with some businesses, particularly financial firms, starting to bring employees back into the office full-time. This shift will likely lead to increased demand for office space and higher prices. Newer office buildings are also in high demand due to their modern amenities such as natural light, collaborative spaces, and fitness areas.

    While not all office buildings are created equal, Acton believes that the current market presents a buying opportunity similar to the 1970s, when offices were undervalued but went on to boom in the 1980s. Those who invest now may be able to reap significant returns as the office sector recovers.