There’s geographic variation in the office sector, with some Southern metros like Miami and Dallas showing resilience, while traditionally strong technology hubs such as San Francisco and Seattle are facing the brunt of the blow because of shifting work patterns. 

In fact, the sector faces another two years of capital value falls, according to a report from Capital Economics’ chief commercial real estate economist this summer. Seattle and San Francisco were set to be the worst hit, with cumulative declines predicted to be about 25% to 30%. But there was a bright spot: the South. And it seems to be looking even brighter. In a recent analysis, the research firm reiterated strength in Southern metropolitan areas, pointing to Miami as a clear winner.

“Employment and occupancy trends therefore support our view that southern office markets such as Miami and Dallas will continue to outperform,” assistant economist Imogen Pattison wrote. “At the other end of the spectrum, continued IT job cuts and a high propensity for remote work in that sector will remain bad news for offices in tech-heavy regions.” 

Relatedly, JPMorgan Chase, led by chief executive Jamie Dimon, recently doubled down on its office space in Miami, with plans to expand to 160,000 square feet. Goldman Sachs doubled its downtown Miami office footprint in 2022. That same year, Ken Griffin’s Citadel announced its new global headquarters would be in Miami, and has since leased more office space. Oracle, Palantir, and Hewlett Packard Enterprise also relocated their offices to Miami, and Amazon is looking for another 50,000 square feet following founder Jeff Bezos’ relocation to Florida this year. Apple leased 45,000 square feet in the Miami suburb of Coral Gables and is opening a retail store. And the tech giants are obviously bringing their employees with them, so much so the rich newcomers are waiting years and paying millions to get into exclusive country clubs.

Stephen Ross, the billionaire owner of the Miami Dolphins, who is also the mastermind behind New York City’s Hudson Yards development, recently stepped down from the private real estate company he founded in 1972 to focus on developing commercial and residential properties in South Florida, although his focus is mainly West Palm Beach. Overall, Florida has seen a boom in tech and finance in the post-pandemic period.  

In June, average quarterly office jobs across 30 metropolitan areas turned positive for the first time in roughly two years, even though employment growth in the information sector declined. Still, a lot of the recovery in office jobs for that specific month was because of a surge in Miami’s own office-based employment growth, according to Capital Economics, as it rose to its highest rate in around two years, as well. In the city, more people are returning to the office, and Capital Economics cited data from foot traffic analytics company Placer.ai, which found office visits in the city “had recovered to 90% of their pre-pandemic levels by July, well above the 72% national figure.” 

All commercial real estate felt the pain of higher interest rates after an era of cheap money. But no other sector really felt the pain of the pandemic and remote work. People are still working from home, whether they’re fully remote or hybrid, and offices are still in trouble. Capital Economics previously predicted office values would fall 40% by the end of next year, with no recovery in the next decade and a half. And in the second quarter of the year, office vacancies set a new all-time high, according to Moody’s.

“The office sector set a record vacancy rate at 20.1%, breaking the 20% barrier for the first time in history,” a Moody’s analysis read at the time. “The slow bleed occurring in the office sector has led to a steady rise in the vacancy rate as permanent shifts in working behavior have outlasted the initial wave of the pandemic four years ago.”

And it could get worse, either in vacancies, values, or both. It was already a tough year for the information sector because of layoffs, Capital Economics said, and it expects more bad news for “tech-heavy metros in the West” for the second half of the year.