It’s been five years since the pandemic shut down offices and jolted real estate. In that time, entire playbooks have been rewritten: how we work, how we invest, and what we expect from the spaces we occupy.
For a while, the story was one of waiting. Waiting for employees to return to the office on their own terms. Waiting for the Federal Reserve to lower interest rates. Waiting for stability to show up like a dinner guest running late.
Now, that waiting period is over. Both investors and employers have decided patience is no longer a strategy.
Let’s look at how both groups have shifted from hesitation to action, and what those moves mean for the real estate market today.
Investors: Deals Without the Rate Cut
For much of 2022 and 2023, investors were on the sidelines, paralyzed by the “will they or won’t they” of Fed rate cuts. Sellers held onto yesterday’s valuations, buyers ran the math under today’s borrowing costs, and the bid-ask gap swallowed deal flow.
Today, the industry has adjusted to the “new normal.” Capital is flowing again, not because conditions suddenly improved, but because decision-makers stopped waiting for perfect timing. Buyers are writing offers that reflect higher costs of capital. Sellers are resetting expectations to match reality, and lenders (while still cautious) are back at the table.
What changed? A recognition that sitting on the sidelines is its own kind of risk. Inflation may cool and rates may fall, but deals that can pencil in this environment are starting to look more attractive than the endless game of waiting for tomorrow’s market to magically appear.
Employers: Return-to-Office Fatigue
The same shift is playing out in corporate America. Employers have grown weary of the flexibility debate.
Early return-to-office policies were built around carrots: free lunch, casual Fridays extended into casual Tuesdays, upgraded coffee machines. The stick was rarely used.
2025 looks different. At least 72% of companies now report they’re hitting attendance goals, up dramatically from last year per CRE Daily. Enforcement has doubled, and nearly 70% of organizations track compliance. Furthermore, over a third of organizations are no longer shy about tying pay and promotions to in-office time.
The results are mixed. Office attendance is still hovering at just over half of pre-pandemic levels, and the concept of the “permanent desk” has all but disappeared. In fact, in North America, only 40% of companies still have a 1:1 desk-to-employee setup. Flex space, hot desking, and “just-in-time” portfolios dominate.
Still, the message from employers is clear: the grace period is over.
What the Data Says About Office Demand
The tug-of-war between flexibility and enforcement has direct implications for real estate values.
One recent academic study quantified the connection:
- A one-day-a-week policy leads to a 41% drop in office demand.
- Two or three days in office trims demand by just 9%.
- A four- or five-day mandate actually pushes demand slightly higher.
Leasing activity confirms this theory. The first half of 2025 was the strongest since 2019, with new leases making up more than half of large transactions. Vacancy rates in two-thirds of U.S. metros ticked down, and overall availability improved for the first time in years.
Interestingly, rents for the highest-tier towers have appeared to decline, but that’s more illusion than reality. Trophy space is already spoken for. Tenants are leasing the next rung down, giving the impression of falling rents when in truth the top of the market is simply full.
Investors and Employers: Same Instinct
What’s striking is how similar the behavior of investors and employers has become. Both have decided that waiting is no longer productive.
- Investors are closing deals at today’s numbers rather than gambling on tomorrow’s rate cuts.
- Employers are enforcing attendance rather than hoping workers wander back.
- Occupiers are adjusting portfolios, making real estate decisions based on actual performance data rather than hypothetical future trends.
The parallel is hard to miss: stop waiting, start acting. That shift is what’s breathing new life into both investment activity and office demand. It signals a market less defined by uncertainty and more by decisive moves, even if the conditions aren’t perfect.
Five Years After the Pandemic
The early years after 2020 were defined by uncertainty. Every decision was provisional, every projection had an asterisk.
However, five years on, the market has entered a different phase. It’s not necessarily more predictable, but it is more decisive.
Investors are playing the cards on the table. Employers are calling time on flex fatigue, and the office market (while far from back to its 2019 peak) is recalibrating around action instead of hesitation.
The experiment phase is over. What began as trial runs and temporary fixes has given way to firm commitments. Employers are setting clearer expectations, investors are putting capital to work, and occupiers are aligning space with performance rather than hypotheticals.
For real estate, that shift from testing to decisive action may be the most stabilizing force we’ve seen in the past five years.
What This Means for Southern California Investors
At Economos DeWolf, we see this shift every day.
Buyers who spent some or all of the past five years watching from the sidelines are back in the market, adjusting their models and moving forward with deals that make sense now, not in some hypothetical future. Employers are making firmer space commitments, and that activity is starting to show up in leasing data across Southern California.
For investors, this means opportunity. Properties that looked untouchable in 2020 (during the height of the pandemic) or 2022 (as interest rapidly rose) are suddenly moving. Creative office conversions, industrial repositioning, even select retail—all are benefiting from the same principle: decisiveness is back in fashion.
Five years after the pandemic, the market has stopped holding its breath. For those ready to act, this next cycle is the time to execute.
Looking for the next opportunities? Connect with Economos DeWolf to discuss where capital and momentum are converging in Southern California real estate.
