Tough lending conditions continue to leave their mark on the office market, perhaps best evidenced by the bottom line of office property sales in the last year. To that end, according to the latest national office report by commercial real estate listing platform CommercialEdge, office properties continue to trade at a discount rate.

In the first two months of 2024, office sales totaled $3.6 billion nationwide for an average of $179 per square foot of office space. Looking at year-to-date sales, the Washington, D.C. office market claimed the #1 spot with a grand total of $429 million in sales of office properties. However, it’s worth noting that almost 80% of that amount came from a single transaction: In mid-February, CoStar Group purchased the Central Place Tower in Arlington for $339 million, dwarfing the total sales volume of all other markets. The company aims to relocate its headquarters from downtown Washington, D.C. office space across the Potomac to the Rosslyn area of Arlington, Va.

After D.C., two West Coast markets followed in office sale volume. Coming in as the runner-up, San Diego office sales totaled $142 million year-to-date, outpacing the $139 million total in Seattle. Both markets have greatly benefited from the recent life sciences boom, ranking among the office markets with the most robust supply as a result. Specifically, Los Angeles sales totaled $91 million, while the figure for San Francisco office properties stood at $65 million.

At #4, Dallas sales totaled $137 million, making it the Texas office market with the largest sales volume and exceeding the sales volume for office properties in Austin ($118 million) as well as Houston’s $49 million.

Meanwhile, the fifth spot was occupied by the Twin Cities office market, where office sales volume stopped at $135 million. This placed the market at the top of the list in the Midwest, even outpacing sales volume for Chicago office space, which stood at $117 million.

In the Northeast, New Jersey recorded the largest sales volume at $109 million. Office space in Manhattan followed with $77 million for the 11th-largest sales volume in the U.S., underscoring the severity of the drop in office valuations, as well as overall sales volume in the market that historically made headlines with high-profile office building sales. Nearby, Philadelphia office sales added up to $44 million year-to-date.

Among Florida markets, office properties in Miami recorded the largest sales volume with $46 million, followed by Tampa’s $39 million and Orlando’s $16 million.

Beyond changing work model trends and the adoption of remote work, slowing employment in office-using sectors also put downward pressure on the office market. In fact, according to data provided by the Bureau of Labor Statistics, office-using sectors only added 12,000 jobs in February 2024 for a yearly employment growth of 0.6% — considerably lower than the 1.8% growth experienced by the job market as a whole. Taking a more granular glance, the professional and business services sector was responsible for most of the job growth in office-using industries, adding 9,000 jobs, while information added 2,000 and financial activities contributed an additional 1,000 employees.

At the metro level, 71 of 120 markets experienced year-over-year declines in the number of office-using employment. Notably, Miami was the only market to witness more than 2% growth, while office employment suffered the most in Western markets due to large drops in San Francisco (-5.6%), Los Angeles (-4.8%) and Portland, Ore. (-4.4%).