2026 Office Market Outlook

Interview with Paul Rupprecht, Executive Vice President, R&R Realty Group, and Adam Kaduce, President, R&R Real Estate Advisors 

Big-Picture Outlook: The Health of the Office Market 

Paul Rupprecht: 
As we look ahead to 2026, I would characterize the national office market as being in a phase of gradual but uneven improvement. The pandemic fundamentally changed how office space is used, but we’re clearly seeing the pendulum begin to swing back. Office space remains relevant—people still need a place to collaborate, innovate, and build culture—but utilization has become far more intentional. 

What stands out most is the uneven performance across assets. Well-located, well-amenitized buildings are performing significantly better, while many Class B and C properties continue to struggle. That reality is driving investment decisions. Owners who are willing to invest capital to keep buildings relevant are seeing better outcomes. Tenants today are choosing quality over quantity, and that shift is very real. 

Another encouraging trend we’re seeing—both locally and nationally—is that companies are once again making long-term office decisions. Immediately following COVID, many leases were short-term and defensive. Today, lease terms are extending again. Rising construction costs play a role—if a tenant is investing meaningfully in their space, they need longer terms to make the economics work—but it also reflects growing confidence in the role of the office going forward. 

Adam Kaduce: 
I agree completely. Companies are no longer simply “kicking the can down the road.” They’re committing to space that supports their people and their culture. Employers are making intentional investments to create environments where employees actually want to be, and that confidence is translating into longer lease commitments. 

Interest Rates and Capital Markets 

Paul Rupprecht: 
Interest rates continue to influence nearly every decision in the market. While rates have been volatile, we’re starting to see more acceptance of what feels like a new normal. That said, capital remains expensive, and that reality is driving a more cautious approach to leasing and development. 

Tenants and owners alike are focused on capital preservation. Leasing decisions are thoughtful, deliberate, and centered on long-term viability rather than short-term wins. Rates have encouraged discipline, and that discipline is shaping how companies evaluate their real estate strategies. 

Flight to Quality vs. Value-Add Opportunities 

Paul Rupprecht: 
The flight to quality is absolutely still in play and remains a dominant theme heading into 2026. Tenants continue to prioritize high-quality space, and true value-add opportunities are becoming harder to find. With today’s construction and financing costs, many of those deals are difficult to pencil. 

Landlords who already control high-quality assets—and don’t need to rely heavily on speculative value-add—are generally in a stronger position today. 

Adam Kaduce: 
I’d add that while value-add opportunities still exist, lenders are being patient. We’re not seeing widespread pressure from banks or regulators forcing write-downs or distressed sales. Lenders are working with borrowers, which allows owners to be more selective and strategic about redevelopment rather than reactive. That stability is helping prevent forced outcomes and giving the market time to adjust. 

Large Office Users vs. Small, Flexible Footprints 

Paul Rupprecht: 
The most successful landlords will be those who design for optionality. Demand today exists at both ends of the spectrum—large users and small, nimble tenants—and buildings need the flexibility to accommodate both. 

At R&R, we plan with that flexibility in mind. The ability to expand, contract, or reconfigure space is critical. Landlords who can adapt alongside their tenants—whether a company is growing or becoming more efficient—will be best positioned for success. 

Central Iowa Office Market: Local Perspective 

Paul Rupprecht: 
Central Iowa is in a strong position. Population growth continues to feed into the Des Moines metro, largely from surrounding communities. One of our ongoing challenges is economic diversity—we still rely on several large employers—but the real backbone of this market is small- and mid-sized businesses. 

Adam Kaduce: 
That’s exactly right. Supporting entrepreneurial growth is critical. One challenge Iowa faces is that when companies reach a certain scale, they often become acquisition targets and jobs leave the market. To sustain long-term growth, we need to intentionally support startups and mid-sized businesses as they scale. 

Des Moines also benefits from a highly educated, white-collar workforce. Our history in insurance and financial services has created a deep talent pool—banking, actuarial science, finance—that continues to attract companies doing business nationwide and globally. That talent advantage remains one of our strongest differentiators. 

How Tenant Decision-Making Has Changed 

Paul Rupprecht: 
Employees continue to have a strong voice in office decisions, and employers are listening. Culture is central, and office space plays a meaningful role in shaping it. Flexibility and variety within the workplace—collaboration areas, quiet spaces, social zones—are no longer optional. 

Adam Kaduce: 
We’re also seeing a shift toward employee-centered location decisions. More companies are analyzing where their employees actually live, often by ZIP code, and choosing office locations accordingly. Accessibility—proximity to major roads and highways—is critical. The decision-making process has shifted from executive preference to employee experience, and that’s a fundamental change from five or ten years ago. 

Strategies for Owners and Landlords 

Paul Rupprecht: 
Investing in assets is no longer optional. Waiting for the market to recover is not a strategy—it’s a risk. Owners must actively create value through amenities, operations, and responsiveness. How quickly you can solve tenant challenges matters more than ever. 

Adam Kaduce: 
Landlords must also position themselves as trusted experts. Tenants expect guidance—not just on leasing, but on design, construction, property management, and long-term planning. Our clients want to focus on their businesses and their people. Our role is to simplify the real estate side and bring expertise to the table. That partnership mindset is becoming a true competitive advantage. 

Final Advice for Business Leaders Looking Ahead to 2026 

Paul Rupprecht: 
Design your office around collaboration, adaptability, and culture. Involve key stakeholders early—HR, IT, leadership—because these are long-term, capital-intensive decisions. While no one can predict the future, resilience and flexibility should be built into every space. 

Adam Kaduce: 
I’d echo that. Engage the right people early and be intentional. When done well, office decisions can become a strategic asset rather than a fixed cost. Thoughtful planning creates long-term value for both the business and its employees.