According to CBRE, roughly 10 percent of existing office stock in major markets meets the criteria lenders are still willing to finance. That is a small percentage. In absolute terms, it represents a significant number of assets that are performing, trading, and closing with financing in a market where most people have stopped looking.
The market has largely decided that office is uninvestable. Lenders have pulled back, investors have rotated out, and the dominant narrative has compressed an extraordinarily diverse asset class into a single storyline. That narrative works as a headline. It does not work as an underwriting standard.
Why Treating All Office the Same Misses the 10 Percent That Still Trades
The office market is not one market. It is dozens of micro-markets defined by building class, submarket, tenant profile, lease structure, and variables that determine whether a specific asset has a viable future.
A 1990s-vintage suburban office park with 60 percent occupancy and no amenities is a different asset from a recently renovated Class A tower with a single investment-grade tenant on a 12-year lease. Both are office. One is essentially unfinanceable. The other is getting done.
The broader market collapse has made this distinction more important, not less. Assets that would have been financed on the strength of the category now need to stand on their own fundamentals. The ones that can are finding capital. The ones that cannot are not, regardless of how aggressively they are pitched.
Category avoidance and asset-level analysis are different things. The market is confusing them.
The 4 Filters Lenders Apply Before Writing Office Paper
The assets clearing the market right now share a consistent set of characteristics.
Occupancy is the first filter. CBRE data on active office transactions shows lenders are generally requiring 85 percent or better before engaging seriously. Below that threshold, the income stream is too uncertain to support the underwriting. Assets at 70 or 75 percent occupied may eventually get there, but they are not financeable today.
Tenant quality is the second filter. High occupancy with short-term leases to tenants of uncertain financial strength does not produce a financeable asset. Lenders want weighted average lease terms of 5 years or more, with tenants who have the balance sheet to honor those leases through a potential economic downturn.
Physical quality matters as a third factor. Buildings that have invested in amenities, HVAC systems, and technology infrastructure are retaining tenants at higher rates than those that have not. The capital expenditure required to bring an older building to current standards is factored into every lender’s analysis, and assets that have already made that investment are more likely to get financed.
Location is the fourth variable, but not in the way the conventional narrative suggests. Suburban campuses with strong transit access and proximity to where employees actually live are outperforming some downtown assets in some markets. What matters is whether employees are actually showing up, not where the building sits on a map.
Four filters. Most distressed office assets fail at least two of them.
Where Lenders Are Still Active
The lenders still writing office paper are a specific and relatively small group.
Life insurance companies remain active on stabilized, investment-grade tenanted assets with long lease terms. They are not stretching on leverage, but they are underwriting.
Certain debt funds with office expertise are active in the value-add segment, but they are selective and charging more for the additional risk they are absorbing. A building at 75 percent occupancy with a credible lease-up story and a sponsor with a track record in office can still find financing. It will be expensive, and the lender will underwrite the downside carefully.
Regional banks that had office lending programs have largely stepped back and most are not returning to the category in the near term. The active lenders are institutional and their office lending criteria are narrow and specific.
The active market in office is small, specific, and not accessible through general outreach.
The Practical Move
When an office opportunity comes across your desk, run it through the four filters before pitching it anywhere. Occupancy 85 percent or better. Weighted average lease term 5 years or more. Physical quality at or above current market standards. Location that supports actual employee attendance.
Assets that pass all four filters represent the 10 percent that still trades. The lenders active in this segment are not accessible through standard channels because their office activity is narrow and selective. If you can correctly identify which assets meet the current financing criteria and articulate why a specific asset clears the bar, you are providing something the market broadly is not offering.
When a category is broadly avoided, specificity is the advantage. The broker who knows which 10 percent qualifies and how to reach the lenders writing that paper is in a different market than the one who has written off the category entirely.
LoanBase tracks current lender activity by asset class so your team can identify which lenders are still writing office paper and what criteria they are applying.
