Quality Doesn’t Always Mean Newer Office Space

“Flight to quality” has been a recurring theme in the office market. As companies consolidate and upgrade workspaces, they’re looking for newer, flashier, heavily amenitized buildings to lure workers back to the office.

Or so the headlines suggest.

But for many occupiers, quality doesn’t mean newer.

Experts told Connect CRE that many older office buildings can successfully compete for occupiers, especially when they offer the right combination of location, functionality and investment.

“Flight to quality is still real. But I also don’t think there is one universal definition of quality, and I would be cautious about assuming that every occupier wants, or needs, the newest or flashiest asset,” said Steve Quick, Guckenheimer Americas’ CEO.

In other words, the question occupiers ask might not be about age. Instead, the consideration is whether an office space works for business activities and employees.

Age Isn’t Obsolescence

Calling a building “older” can be misleading. A 40- or 50-year-old building can remain competitive if it has a strong location and has been well maintained and updated. Meanwhile, a newer building can struggle if it isn’t well-located or fails to meet occupier needs.

The definition of “older” also depends on what has happened to a building since it was constructed.

“I think older buildings might be considered those that haven’t been delivered or meaningfully renovated in the past five years, and don’t hold trophy Class A status,” said Michael Watts, CBRE’s President, Office Investor Leasing in the Americas.

A building’s last upgrade might be more relevant to an occupier than its actual age. It can mean the difference between a functional workspace and inefficient systems.

“If a building hasn’t been recently renovated, this could indicate aging building systems,” observed Andy Cullen, managing partner and broker with tenant rep firm TRE.

“That can have a significant impact on a tenant’s discomfort.”

Additionally, media write-ups and headlines don’t help position the “older building” narrative in a positive light. RJ Vara said that many older assets are perfectly fine buildings that suffer from under-investment, which can be improved.

“The misconception about older buildings comes from how the market talks about office,” said Vara, who is Northmarq’s senior vice president.

“Headline vacancy numbers lump everything together, the trophy towers with concessions get the press coverage, so the assumption is that anything else is a write-off.”

You Can’t Renovate a Location

One advantage many older buildings offer that a new construction project can’t replicate is an established, convenient location.

Many vintage office properties came online during earlier periods of market growth. As a result, they ended up in employment hubs, established retail and dining districts and, in some cases, near efficient and convenient transportation systems.

This means that an older building can have an advantage over a newer property in a secondary location.

“Buildings more than 15-20 years old typically fall into Class B or C categories, but a well-located 30-year-old building in a CBD core can outperform a 10-year-old building in a secondary location, especially if with recently upgraded tech infrastructure,” according to JLL’s Senior Managing Director and Leasing Advisory Lead Katy Redmond.

In other words, tenants can upgrade a building’s technology, finishes and amenities. They can’t move the building closer to where their employees, customers and business partners already want to be.

“While age might define these older buildings, location can give them an edge,” said Sophia Humprey, principal with Phoenix Design One.

Class B Gives Class A a Run—Sort Of

In some markets, older buildings are holding their own against their newer counterparts.

In Dallas-Fort Worth, for example, CBRE reported that Class B leasing outpaced Class A leasing in the second quarter of 2026. Class B absorption improved from negative 359,000 square feet in the second quarter of 2025 to positive 626,000 square feet a year later. This helped boost overall regional net absorption into positive territory.

CBRE also reported slightly lower vacancy for Class B than Class A during the quarter.

The reasons are fairly clear. CBRE’s Office Occupier Insight report noted that cost-conscious occupiers, including healthcare, education and municipal governments, drive demand for Class B and C office space. Those occupiers tend to prioritize localized convenience, baseline utility costs and rent discounts over hospitality-focused office perks.

That doesn’t mean every occupier is abandoning trophy spaces. The office occupier report said that sectors, including finance and professional services, continue to seek space with high-end amenities and walkable, mixed-use locations.

In other words, the office market is highly varied. The buildings differ. So does what occupiers want from their space.

So, What do Occupiers Want?

Companies are increasingly making office space decisions based on their individual business models, workforces and priorities rather than opting for whatever is considered the highest-quality product for the market.

For some occupiers, an older building in a convenient location provides accessibility, character, economics and flexibility without the premium associated with a trophy property.

“Location and convenience may outweigh newness,” Quick said. “An occupier may already be in a location that works exceptionally well for its employees, clients and business. You can invest in improving a building’s experience, but you can’t relocate the building.”

There’s also the question of whether tenants actually need everything a trophy building offers.

Companies are becoming more deliberate about the return on their real estate investment, Quick said. If an existing building supports an organization’s culture, workforce and operational needs, moving simply for a more prestigious address may not make financial sense.

That calculation becomes more difficult when the cost of the upgrade is considered.

“With average tenant improvement (TI) allowances trending at $107 per square foot and 10.5 months of rent abatement for 10-year leases, massive upfront capital requirements may make a higher cost Class A trophy option less viable,” Redmond said.

Rising total occupancy costs, including energy, utilities and operating expenses, add another layer to the decision.

For some tenants, paying more for an upgraded building may make sense. For others, it may not.

Making the (Up) Grades

The scarcity of high-quality space can further complicate the equation.

“As new and renovated buildings lease up, and when new construction is limited, as it is in Phoenix, it also limits a tenant’s options,” Humphrey said. “That’s where older buildings come back into play.”

She added that a lack of Class A inventory has prompted some of Phoenix Design One’s occupiers to undertake their own renovations in older office assets, creating the desired “wow” factor without paying the price associated with trophy space.

Meanwhile, the leasing data suggest that older buildings can remain competitive when they receive the right investment.

According to Watts, net absorption turned positive for all office vintages in the second quarter, he said, with buildings constructed before 1970 in some regions nearly matching the absorption of buildings constructed since 2010.

Possible reasons include a lack of availability in newer buildings, which can push occupiers toward older properties in prime locations, as well as renovations that allow older buildings to compete for Class A or even trophy tenants.

“As the highest quality of space is drying up, location is proving more and more important in tenant leasing decisions,” Watts said.

The Cost of Moving Gets Overlooked

There is another factor that doesn’t necessarily show up in rent comparisons: the costs of leaving the building that a tenant already occupies.

For one thing, the true cost of occupancy often goes beyond the headline rent. Operating expenses, parking charges, after-hours HVAC and load factors can change the economics of a move.

Vara of Northmarq said tenants can often reduce occupancy costs by trading a trophy address for a well-run older building nearby.

Then there is the cost of moving itself.

“Between cabling, furniture, moving, downtime, signage, and the internal management time, a relocation costs real money that never appears in the rent comparison,” Vara said.

Finally, employees could be attached to a specific location and might not want to leave it.

“The commute, the parking, the lunch options, the fact that they know the building, all of these matter,” Vara said.

“Moving a workforce is a retention event, and a lot of occupiers have decided that risk is not worth an upgraded lobby.”

The Real Bifurcation: Capital Investment vs. Obsolescence

Not all older office buildings are positioned to succeed.

“The market is bifurcating between strategically repositioned assets and those facing functional obsolescence,” Redmond said.

Location still matters. Infrastructure matters. Ownership matters. And a building that hasn’t received meaningful capital investment can face very different prospects from one that has been strategically repositioned.

That may be a more useful way to look at the office market than by dividing buildings by vintage.

“Well-located older buildings with attentive ownership are leasing,” Vara said. “The product that is struggling is generally the product that has not seen capital in fifteen years, and that’s a management story more than a vintage story.”

There may even be another opportunity emerging from the office distress cycle.

According to Cullen, the debt crisis has disproportionately affected older office buildings, sending them back to lender ownership. But this could create opportunities, especially since these assets are being sold at a discount.

“New owners can come in at a lower basis and have greater flexibility to invest in upgrades and reposition the asset,” he said, adding that such a cycle could continue over the next several years, meaning older properties could be competitive with the newer Class A assets.

Ultimately, there is no single definition of quality. At the same time, no single office product will work for every occupier. Additionally, age doesn’t automatically mean obsolescence.

“A brand-new trophy building may be exactly the right answer for one organization,” Quick said. “For another, a well-located older building with strong fundamentals and workplace services will be a better fit for its workforce and may deliver more value.”

Photo: Photo Spirit/Shutterstock