Dr. Gleb Tsipursky – The Office Whisperer
Nirit Cohen – WorkFutures
Angela Howard – Culture Expert
Drew Jones – Design & Innovation
Jonathan Price – CRE & Flex Expert
This article is the first of new series exploring the product-market fit crisis currently plaguing the commercial real estate market. As a globally recognized leader in flexible workspace strategy with more than 25 years of experience shaping real estate across 65+ countries, Andrea Pirrotti-Dranchak brings a rare perspective on how product–market fit is reshaping commercial property. Across the series, she explores where landlord offerings and occupier demands diverge — why that divide is so costly — and how the industry can realign.
Every business — from startups to Fortune 100s — lives or dies by product–market fit. When your product doesn’t align with what customers want, you don’t just miss the mark, you fail.
Commercial real estate is no exception. Yet many landlords are still offering a product from another era: decade-long leases, oversized floor plates, and a predictable list of amenities. Occupiers, on the other hand, want something very different.
That disconnect is now one of the biggest risks in commercial property.
Occupiers Have Changed
Hybrid work is here to stay. Business cycles are less predictable. Finance leaders are unwilling to make decade-long commitments.
The data proves it. In 2025, Fox Corporation renewed nearly 670,000 square feet of office space — but cut its footprint by 13 percent in the process. Fannie Mae did the same in Washington, D.C., signing a new long-term deal at 340,000 square feet — 48 percent smaller than before.
When some of the biggest occupiers in the country are using renewals as a chance to right-size, it’s clear the market has shifted.
And this is not just about a few high-profile tenants. More than 265 million square feet of commercial leases are set to expire in 2025, giving companies across the country a chance to renegotiate or shed space altogether.
According to Cushman & Wakefield / CoreNet Global survey, only 32 percent of corporate real estate leaders said they planned further cuts this year — a sign that while aggressive downsizing may be slowing, the era of “less and flexible” is here to stay.
Vacancy Shows the Mismatch
Vacancy rates reveal the consequences of this misfit. National office vacancy hovers near 19 percent. In San Francisco, the figure is 34.8 percent. Chicago’s central business district is at 24.3 percent, and Austin is at 22.8 percent. Even in Los Angeles, vacancy is still 24.1 percent as of mid-2025.
Millions of square feet sit empty because the product being offered — large, long-term leases — is not the product occupiers want.
Long Leases Don’t Guarantee Stability
Even when companies sign long contracts, landlords can’t rely on them. Corporate bankruptcies are rising, and rejected leases are part of many restructurings.
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On the ownership side, office loan defaults jumped 70 percent year over year in 2024, according to Moody’s. That’s a signal that “long paper” is no longer a safety net.
The Core Disconnects
The gap between landlord product and occupier demand shows up in three places:
- Lease length: Landlords want 10 years. Occupiers are signing closer to seven — and even then, they want flexibility built in.
- Space size: Landlords market large blocks. Occupiers are shrinking.
- Amenities: Landlords deliver features. Occupiers want outcomes — services that drive productivity, wellness, and collaboration.
A Clear Path Forward
This isn’t a tenant wish list, it’s a market reality. Landlords who adapt can capture demand and protect asset value. That means offering more plug-and-play suites in the 3,000- to 15,000-square-foot range.
It means pricing flexibility as a standard feature, not a reluctant concession. And it means partnering with operators who can deliver service, hospitality, and community inside the building.
The Lesson
Every industry learns the same lesson: without product–market fit, mistakes get expensive. Real estate is no exception.
The demand for office space has not disappeared, but rather evolved. Landlords who evolve with it will remain relevant. Those who don’t will be left with empty floors and depreciating assets.
Because if your product doesn’t fit the market, you don’t just risk vacancy — you risk failure.
In the next installment of this article series, Andrea examines the financial fallout of misfit — from loan delinquencies to the real cost of unused space for occupiers. Look for it exclusively on Allwork.Space on September 17.
