Office buildings

Office buildings range from small medical and professional buildings to downtown towers. Since the pandemic, many companies need less space because people work from home part of the week. National office vacancy reached about 20% in 2024. In San Francisco it passed 33% in 2023.

Big downtown towers have lost the most value. Several San Francisco and Los Angeles buildings sold for 60–90% less than their earlier prices. Large owners such as Brookfield defaulted on loans. Some buyers see a chance to buy at the new, lower price. But a big drop from an old price is not proof of a bargain. What matters is the rent the building can earn after you pay to fill it, and leasing space costs money (tenant improvements, commissions, free rent) and can take years.

Small office buildings used by the owner’s own business (a dentist, doctor, accountant) are a different story. The owner is the tenant, so vacancy risk is low. SBA loans can make buying possible with a small down payment. Turning offices into apartments is possible but slow and costly, and only some buildings fit.

Who it suits

Professionals (dentists, doctors, accountants) who will use the building themselves, want stable occupancy costs, and would rather build equity than pay rent.
Well-funded buyers with cash and patience, who buy well below past prices and plan to hold 10 years or more.
Experienced developers converting suitable older buildings to housing, especially where cities offer incentives.
Public agencies or users who need space and can buy a building for less than the cost of fixing their own (Los Angeles County).

Who it doesn’t

Beginners buying a mostly vacant multi-tenant building with borrowed money.
Investors who assume prices will bounce back quickly.
Anyone without reserves for tenant improvements, commissions and free-rent periods.
Conversion projects without expert help; zoning, design and approvals can take years.

Real stories

A dentist buys his own building with an SBA 504 loan (2022)

A Napa dentist opened his practice in a leased space in 2010. It grew to a staff of eight and ran out of room. Working with a local bank and a certified development company, he used SBA 504 financing to buy and renovate a 3,127-square-foot building a couple of miles away. The move added two local jobs.

Lesson: Owning your own small office can suit an established professional whose practice is stable and who plans to stay for many years. Napa Valley Register: Napa biz buzz: dental practice relocates with SBA funding (Feb. 8, 2022)

Buying a mostly empty tower far below its old asking price, and planning to hold (2023)

SKS Partners and the Swig Company bought 350 California St., a 22-story Financial District tower, for about $61 million. That was roughly 75% below what the seller had asked in 2020. The building was mostly vacant. The buyers planned to hold it for a decade or more, and the low price let them lease space at lower rents.

Lesson: Buying an office building cheaply only works for owners who can wait years and pay to lease it up. The San Francisco Standard: Downtown San Francisco $61M tower purchase signals real estate reset (Sept. 26, 2023)

Office building becomes apartments (2026)

Foulger Pratt, a developer that used to focus on offices, looked at 30 properties. In 2019 it bought a downtown D.C. office building to convert into apartments. Residents began moving into the converted building in October 2025. The city offers incentives such as a 20-year property tax abatement for conversions.

Lesson: Conversions can work for experienced developers who pick the right building early and use local incentives. They are not a beginner project. NPR: From cubicles to kitchens: How empty offices are becoming homes (Feb. 21, 2026)

A Los Angeles skyscraper sells for $200 million after a $632 million valuation (2024)

Brookfield defaulted on the loan on the 52-story Gas Company Tower after its main tenant planned to move out. Los Angeles County bought it in December 2024 for $200 million. It had been valued at $632 million in 2021. The tower was only 57% leased.

Lesson: A big office building’s value depends on its tenants. When they leave and the loan comes due, even a famous tower can lose two-thirds of its value. Commercial Observer: L.A. County Finally Closes $200M Deal for Troubled Gas Company Tower (Dec. 11, 2024)

A 15-story office building sells at 90% off (2024)

The 15-floor David Hewes Building was once a Burning Man headquarters and a WeWork location. It sold in 2024 for about 90% less than its 2016 price. The building sits on a stretch of Market Street the city has struggled to make safer. A JLL researcher said office pricing in San Francisco may have hit bottom.

Lesson: Location and tenant demand drive office value. Buying at a peak can wipe out almost all of an owner’s equity. NBC Bay Area: San Francisco office tower sells at steep discount (Apr. 24, 2024)

Phoenix office conversion opens after years and a foreclosure (2026)

One Camelback, a former office building at Central Avenue and Camelback Road, was turned into 163 luxury apartments. The project took years and went through a foreclosure. Then new owners, Kinella Capital, got it on track, and pre-leasing began in 2026. The owners said approvals and design made conversion complicated and expensive.

Lesson: Office-to-housing conversions can succeed, but plan for long delays and high costs. The first owner may not be the one who finishes. FOX 10 Phoenix: One Camelback: Phoenix office building converted to apartment now accepting leases (June 3, 2026)

Costs

Leasing costs: building out space for new tenants, broker commissions and free rent, often large sums before any rent comes in.
Vacancy: the Gas Company Tower in Los Angeles was only 57% leased in 2024.
Property taxes and insurance. In California, a purchase triggers reassessment to market value (Board of Equalization).
Transfer taxes: in the City of Los Angeles, Measure ULA can add a 5.5% tax on high-priced sales. Commercial Observer reported it would have applied to the $200 million Gas Company Tower sale, had the buyer not been a government agency.
SBA 504 loans charge fees of about 3% of the debt, which can be financed (SBA).
Building systems: elevators, HVAC, roofs and, in older buildings, seismic upgrades (required in some California cities).

How people pay

SBA 504 loans: long-term, fixed-rate loans for owner-occupied business real estate, with 10-, 20- or 25-year terms and a maximum loan of $5.5 million. They are not for passive or speculative investment (SBA).
Bank commercial loans for investors. Lenders have been cautious on office in 2023–2025, so expect larger down payments.
Large towers often carry big securitized loans. When income falls, owners may default, and lenders foreclose or appoint receivers.
Conversions may use city incentives, such as Washington, D.C.'s 20-year property tax abatement (NPR).

Check before you buy

Get the rent roll and every lease: expiration dates, renewal options, who pays what.
Find out how much of the building is leased today and how much expires in the next 2–3 years.
Estimate leasing costs (improvements, commissions, free rent) for empty space.
Inspect elevators, HVAC, roof, parking and accessibility. In California, check seismic status.
If you will occupy it, confirm SBA 504 eligibility and that the space fits your practice now and as you grow.
For a conversion, check zoning, window placement, floor depth, plumbing and parking with an architect before buying.