We’ve gradually seen more people return to the office since the remote-work norm of the pandemic, and now the winning and losing cities are becoming clearer.
Miami is set to top the leaderboard in the next phase of the office market cycle. The city is forecast to achieve more than 15% capital growth over the next five years, with projected total returns of 9.5% per year from 2025 through 2029, including an elevated return rate of 12.5% per year for 2026 through 2029. This outperformance is driven by:
Houston is another Southern winner, with capital growth forecast at 11.5% over the five-year span and strong rent prospects supporting its outlook. Capital Economics did note, however, that Houston offices look overvalued according to its analysis.
In contrast, the highest-growing pre-pandemic metros were the losers of the last five years and set to remain so, Capital Economics says. This means most western and major northern metros are expected to face continued declines:
These western and northern metros are hampered by higher shares of remote work, expensive rents, and weak office-based job growth.
The U.S. office market is continuing its half-decade of sharp regional divergence. Southern metros—especially Miami, Houston, and Phoenix—are set to benefit from stronger job growth, higher office utilization, and robust rent increases. In contrast, western and major northern cities are likely to continue to struggle with persistent vacancies, weak demand, and falling values.
For investors, developers, and tenants, the message is clear: The forthcoming shakeout from America’s return to office will create distinct winners and losers, with the South leading the way into recovery.
For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.
