Real-estate downturn comes for US' premier office towers

Rents at highest-end buildings fall and rate of leasing slows

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The highest quality office buildings have had much better success navigating the industry's turmoil.

Now, even premier towers ng to wobble are starting to wobble Rents at the highest-end buildings have been falling, while the rate of leasing has been slowing. Tenants have become more sensitive to costs in a world of higher interest rates and lingering concerns about a possible economic slowdown, market participants say.

Owners of the most elite buildings escaped this fate for a while by convincing the market they had created a new class of office tower-one that surpassed the traditional Class A building at the top of the pecking order.

These landlords persuaded bluechip tenants that reluctant workers would return if only their offices sparkled with lush roof decks, fully loaded gyms and food prepared by Michelin-starred chefs. Owners invested heavily in these properties, which were usually new developments with the best locations, views, air quality and modern designs.

But that strategy is losing steam as more companies have accepted the reality of hybrid work schedules and, for the most part, have given upon compelling workers to be in five days a week.