According to commercial real estate brokerage CBRE, office leasing activity had been up 23% year over year in the last months of 2024. But fears about the economy could impact companies’ plans.

The troubled office space market is showing signs of life as firms seek flexible short-term spaces for their employees’ return to work.

In desirable districts, the space glut is over. Many companies see their business, and need for working quarters, expanding in the near future.

Throughout the last year, a lot of big banks have been stocking away more cash to cover bad loans. But even though banks are concerned about the broader economy, they’re still trying to make loans where they can.

As workers settle into hybrid work routines, some employers are upgrading to nicer spaces with a smaller footprint.

A former church. A motorcycle repair garage. Some coworking space companies are eschewing the WeWork business model and are opting for a more local approach.

The construction flatline stems from interest rate hikes — new projects are less affordable, and that’s starting to affect builders.

Some types of CRE are hurting more than others. A steep downturn could cause pain to regional banks as well as property owners.

With sloping, concrete floors and huge, windowless rooms, movie theaters are not the easiest properties to convert.

Factors like high interest rates, tight credit and workers continuing to work from home are all hitting commercial construction demand.