Jon DiPietra Shares Insights on Office Market Transformation

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New York-based valuation executive Jon DiPietra explains how remote work, shifting leases, and new tenant demands are reshaping the office sector
The office market is not disappearing. It is changing.

That is the message from Jon DiPietra, a commercial real estate valuation executive based in New York City, who has spent years analyzing office assets ranging from small properties to some of the country's most recognizable buildings.

"The demand didn't vanish," DiPietra said. "It changed shape."

As companies continue to adjust to hybrid work models, office space is being used differently. Fewer employees may be in the office every day, but expectations for space quality, flexibility, and location have increased.

Remote Work Has Reset Expectations

Before 2020, many office leases were built around long-term occupancy assumptions. Companies are committed to large blocks of space for extended periods, often with limited flexibility.

That model is shifting.

Surveys show that more than 60 percent of companies now use some form of hybrid work model, reducing daily office attendance while maintaining a physical presence. This change has forced tenants to rethink how much space they need and how they use it.

"Companies are asking different questions now," DiPietra said. "It's not just how much space do we need. It's how do we use the space we have."

Tenants are prioritizing collaboration areas, shared workspaces, and environments that attract employees back to the office. Traditional layouts with rows of desks are being replaced by more flexible designs.

Leasing Structures Are Becoming More Flexible

The shift in workplace behavior has also changed how leases are structured.

Shorter lease terms and expansion options are becoming more common. Tenants want the ability to adjust as their workforce evolves. Landlords are responding by offering more flexible agreements to remain competitive.

This introduces new challenges for property owners.

"Lease rollover risk matters more now," DiPietra explained. "If you have multiple tenants expiring at the same time, that risk is higher in a market where companies are still figuring out their long-term needs."

Vacancy rates reflect this uncertainty. In many major U.S. cities, office vacancy has risen above 18 percent, with some urban cores experiencing even higher levels.

These conditions are forcing landlords to rethink leasing strategies, pricing, and tenant incentives.

Quality Is Driving Demand

While overall demand has shifted, high-quality office buildings continue to attract tenants.

Newer properties with strong amenities, efficient layouts, and prime locations are outperforming older assets. Access to transportation, natural light, and modern infrastructure all influence tenant decisions.

"I've seen buildings a few blocks apart perform completely differently," DiPietra said. "The difference usually comes down to quality and location."

Tenants are consolidating into better spaces rather than eliminating office use entirely. This trend has created a gap between top-tier properties and older buildings that may require significant upgrades.

Older Buildings Face New Pressure

For many older office properties, the current environment presents a difficult choice.

Owners must decide whether to invest in renovations, reposition the building for a new use, or consider redevelopment. Some properties may no longer be competitive without significant capital improvements.

Common upgrades include:

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Modernized lobbies and common areas

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Improved HVAC and air quality systems

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Flexible floor plans that support hybrid work

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Enhanced technology infrastructure

In some cases, conversion to residential or mixed-use space is being explored, particularly in cities where housing demand remains strong.

Capital Markets Are Reinforcing the Shift

The transformation of the office market is also influenced by financing conditions.

Rising interest rates have increased borrowing costs, which affects property valuations and investment decisions. At the same time, lenders are applying stricter underwriting standards, particularly for office assets with uncertain leasing outlooks.

Recent data shows commercial property values have declined in several sectors, with office properties seeing some of the largest adjustments.

"Financing has become a bigger part of the equation," DiPietra said. "Even if the building is stable today, lenders are looking closely at what happens over the next few years."

This increased scrutiny places greater emphasis on lease stability, tenant credit, and long-term viability.

A Market in Transition, Not Decline

Despite the challenges, DiPietra does not view the office sector as disappearing.

Instead, he sees it as part of a broader cycle of adaptation.

"Office space has always evolved," he said. "What we're seeing now is another version of that."

Cities continue to rely on office environments for collaboration, innovation, and economic activity. The format may change, but the function remains.

Practical Takeaways for Property Owners and Investors

As the office market continues to adjust, several strategies can help navigate the transition:

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Focus on tenant experience: Upgrades that improve usability and comfort can attract stronger tenants

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Manage lease expirations carefully: Staggering leases can reduce rollover risk

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Stay informed on local market trends: Submarket performance varies significantly

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Plan capital improvements strategically: Target upgrades that align with current tenant demand

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Prepare early for refinancing: Changing lending conditions require proactive planning

"The buildings that adapt tend to perform," DiPietra said. "The ones that don't face more pressure over time."

About Jon DiPietra

Jon DiPietra is a New York City-based commercial real estate valuation executive and co-founder of H&T Appraisal, the valuation division of Horvath & Tremblay. He has extensive experience appraising office, retail, industrial, and mixed-use properties, including several high-profile assets in major urban markets. Known for his disciplined approach to valuation and market analysis, DiPietra has led large teams and contributed to the evaluation of complex real estate transactions throughout his career.
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