A New Era of Quality in Commercial Office Real Estate and the workplace

The commercial office market is undergoing one of the most profound transformations in recent memory. At the heart of this evolution is a clear and consistent theme: a Flight to Quality. What began as a reactive shift during the uncertainty of the pandemic has matured into a deliberate strategy embraced by tenants, landlords, investors, and employers alike. This flight is not merely about leasing higher-end buildings—it’s a holistic reevaluation of what office space should be in the post-pandemic world.

For tenants and employers, the focus has shifted sharply toward premium real estate that offers not just square footage but an experience. In an era where remote and hybrid work models have become standard, bringing employees back to the office isn’t just about mandates—it’s about magnetism. Companies are investing in environments that make the commute worthwhile, blending flexibility, design, and wellness features to deliver workplaces that energize, inspire, and retain talent.

Simultaneously, building owners and developers are racing to reposition underperforming assets and compete with a limited inventory of true Class A and Trophy properties. Record-high vacancy rates in Class B and C buildings are juxtaposed with a surprising shortage of high-quality, amenity-rich offices in vibrant, well-connected locations. From New York to Chicago and beyond, data shows a bifurcation in the market, where only the best-located and best-designed assets attract leasing activity and command premium rents.

This article explores the dual dynamics at play in this new environment: first, how organizations are redesigning their workplaces to meet the evolving expectations of their workforce, and second, how building owners, operators, and developers are repositioning commercial office buildings—sometimes radically—to meet modern market demands. As a design-build firm, ML Group sits at the intersection of these changes, helping companies and developers translate aspirations for Quality into built environments that drive tangible business value.

The flight to Quality is more than a real estate trend—it’s a business strategy. Whether improving employee engagement or preserving asset value, design and construction decisions are now directly influencing outcomes at the highest levels. And those who embrace this shift early are positioning themselves to lead in a new era of workplace and commercial real estate.

The Post-Pandemic Landscape: Challenges and Opportunities

The COVID-19 pandemic redefined where and how we work. Virtually overnight, remote work shifted from an occasional perk to a full-scale operational model, with many companies realizing they could maintain productivity—even improve it—without centralized office space. What initially felt like a temporary pivot has since evolved into a new normal: hybrid work. As a result, many companies downsized their space, delayed lease renewals, or exited traditional offices entirely.

This dramatic recalibration has led to record-high vacancy rates, particularly in Class B and C office buildings. In major U.S. cities like Chicago, New York, and San Francisco, large swaths of legacy office space sit underutilized, unable to meet the rising expectations of tenants and their employees. These buildings, often plagued by dated infrastructure, inefficient layouts, and a lack of modern amenities, struggle to compete in a market where quality, not quantity, is the new priority.

At the same time, demand for premium office environments has surged. This paradox—high overall vacancy yet a limited supply of desirable space—has created both a challenge and an opportunity. Companies are seizing this moment to “trade up,” relocating from outdated buildings to modern, amenity-rich spaces that better reflect their culture, support hybrid work, and help attract and retain talent.

Two primary forces driving this flight to quality are evolving employee expectations and shifting tenant priorities.

On the employee side, the return-to-office conversation has become less about policy and more about experience. Today’s workers are asking: Is the office worth the commute? They want spaces that foster creativity, support mental well-being, and offer flexibility—spaces that blend function, comfort, technology, and community. Companies that invest in these kinds of work environments are seeing a return in the form of greater employee satisfaction, engagement, and retention.

Meanwhile, tenants—including large employers and institutional users—are demanding more from their landlords. They’re looking for Class A buildings with strong transit access, sustainable infrastructure, top-tier building systems, and curated amenities that go beyond the basics. Whether through onsite wellness centers, flexible conferencing hubs, or hospitality-driven common areas, the office must now be a tool for brand-building and employee engagement.

This demand is also shaping capital flows in the commercial real estate sector. Investors are reallocating resources away from stagnant B/C assets and toward well-located, high-performing buildings through ground-up development or significant renovations. In cities like Chicago and New York, where the flight to quality is most pronounced, Class A space can command rents 30% or more above its lower-tier counterparts despite broader market headwinds.

As this market bifurcation continues to deepen, stakeholders recognize mediocrity is no longer a viable middle ground. The post-pandemic workplace is a high-stakes battleground, and quality—design, location, and experience—is the competitive edge.

Redesigning Workplaces to Attract Employees

As organizations navigate the realities of hybrid work, many are shifting from reactive office downsizing to proactive workplace redesign. The question is no longer “Should we bring people back to the office?“—it’s “What kind of workplace makes people want to come back?“ This shift is driving a strategic reinvention of office interiors, amenities, and locations. At the center of this reinvention is a renewed focus on quality of experience, design, and culture.

The Role of Workplace Design

Workplace design is now a powerful tool for talent attraction and retention. The best offices today are not static environments but flexible ecosystems that respond to how teams collaborate, create, and connect. Layouts are being restructured to include a variety of settings—quiet zones for deep work, collaborative hubs for team interaction, and tech-enabled spaces that make hybrid meetings seamless.

But effectiveness alone isn’t enough. Today’s employees crave environments that feel good—places that are aesthetically inspiring, emotionally engaging, and aligned with their company’s values. Design elements like natural light, biophilic materials, open sightlines, and acoustical control contribute to a sense of wellness and belonging.

ML Group’s workplace design for Omnia Healthcare Group‘s corporate headquarters is an excellent example. Our design centered on usability, clarity, and comfort—creating a space that reflects the company’s professionalism and supports the daily rhythm of their leadership, administrative, and operations teams. These types of projects show how even a strictly corporate workplace can drive culture and performance through intentional design.

Reception and Conference Room at Omnia Healthcare Group‘s headquarters.

Amenities That Matter

Amenities have become critical differentiators in the return-to-office equation. But today’s most valuable features go far beyond novelty or aesthetics—they provide convenience, support wellness, and foster community.

High-impact amenities now include fitness centers, wellness rooms, and outdoor terraces—spaces supporting physical and mental health. On site cafés and lounges help employees socialize and recharge. In some larger offices, we’re seeing employers invest in flexible conferencing centers, podcast studios, or mother’s rooms to support a broader range of needs.

What matters most isn’t just what amenities employees offer but how designers integrate them into the workplace. Thoughtful design ensures that these spaces are accessible, intuitive, and aligned with the overall office culture. They increase usage, build loyalty, and turn the office into a desirable destination when done well.

A compelling case study is Bell Works Chicagoland. Originally a vast AT&T campus, the developer, Inspired by Somerset, reimagined the site as a “metroburb“—a suburban office and residential hub inspired by new urbanism to replicate aspects of urban neighborhoods like Chicago’s Lincoln Park or Brooklyn’s Park Slope. With curated amenities, dining, coworking spaces, and wellness offerings layered into a pedestrian-friendly environment, it embodies the next generation of workplace placemaking. Bell Work offers a relevant model of how experience-forward environments can reshape employee expectations, even outside traditional downtown cores.

Event hosted at Bell Work Chicagoland.

Location as a Differentiator

Just as important as the workplace itself is where it’s located. Employees are making decisions not just based on commute time, but also neighborhood vibrancy and day-to-day convenience. Offices located near public transportation, dining, retail, and wellness amenities tend to generate higher employee satisfaction and better usage.

Access to transit and walkable amenities remains a significant draw in urban markets. However, in suburban contexts, developers and tenants are rethinking location strategy—looking to the urban concept of the “15-minute city” and embedding offices within mixed-use destinations that offer a “live-work-play“ experience.

Again, Bell Works provides a noteworthy reference point. With plans to add residences alongside office, dining, and entertainment offerings, the development reflects a new kind of suburban environment that offers energy, convenience, and lifestyle in a single destination. This type of setting is especially attractive in a hybrid world, where the lines between work, life, and leisure continue to blur.

Ultimately, whether in the city or suburbs, location has become a proxy for quality. Office users are gravitating toward places that make their teams feel connected, energized, and supported—not just within the office walls but beyond them.

Repositioning Commercial Office Buildings

While employers are rethinking their workplaces to attract and retain talent, commercial property owners face a parallel challenge: repositioning aging or underperforming office buildings to remain competitive. In an environment where hybrid work has reduced overall demand and accelerated tenant expectations, owners can no longer rely on location alone. The “flight to quality“ has created a clear market bifurcation—Class A and Trophy assets are leasing. At the same time, Class B and C buildings face rising vacancies, shrinking rents, and declining valuations.

Repositioning these buildings isn’t simply about renovation—it’s about rethinking their role, performance, and appeal in a rapidly evolving market.

The Rise of Class A and Trophy Spaces

In today’s market, the definition of “quality“ is shifting from aesthetics alone to a combination of performance, amenities, sustainability, and location. Class A office buildings—which typically feature newer construction, modern infrastructure, and prime locations—are capturing the lion’s share of leasing activity.

The performance gap between Class A and B/C properties is widening in markets like New York and Chicago. According to BDO, Class A offices in Midtown Manhattan can command rents between $75 and $120 per square foot, while nearby B/C assets sit idle at $35 to $50. In Chicago, a similar divide is emerging, with Trophy assets attracting tenants less sensitive to rent and more focused on employee retention, brand identity, and ESG goals.

Institutional tenants are gravitating toward properties that reflect their culture, values, and ambitions. That means developers and asset managers must continuously invest in elevating not just the look of their properties, but also focus on the whole tenant experience.

Renovation vs. New Construction

New construction has become the exception in today’s commercial office market, not the rule. With high interest rates, rising construction costs, and a glut of underutilized space, most stakeholders are focusing on repositioning existing assets. The simple reality is this: we have more office space than we need, and much of it no longer aligns with the expectations of modern tenants.

A significant market correction is underway. Many office owners are underwater—having purchased or financed buildings at valuations far higher than what those assets are worth today. In this environment, owners are often forced into one of three paths:

1. Upgrade the building class (e.g., repositioning Class C assets to Class B or better);
2. Convert the asset to a new use, such as multi-family housing, life sciences, or education; or
3. Return the keys to the lender, leaving the asset to be resold at a significant discount.

While challenging for current owners, this distress creates opportunities for the next wave of investors. Those acquiring buildings at a discount can often redirect the capital savings into renovations—updating infrastructure, rethinking layouts, and adding modern amenities that better align with the flight-to-quality movement.

For these investors, repositioning isn’t about patchwork fixes. It’s about restoring the asset’s value through strategic, high-ROI upgrades. That might mean gutting outdated lobbies, adding smart building systems, or converting surplus space into flexible leasing formats like coworking or spec suites. In other cases, it means integrating entirely new use types, such as wellness centers or conferencing hubs that bring a broader appeal to the property.

ML Group often partners with investors in this scenario, helping them assess what upgrades will drive the most significant return and how to execute them efficiently. While every building is different, the playbook remains the same: identify what tenants want, eliminate inefficiencies, and deliver a space that competes with new construction—without the new construction price tag.

In many ways, the repositioning wave we’re seeing now isn’t just reactive. It’s the commercial office market beginning to right-size itself for the future—with quality, flexibility, and purpose-driven design as the new standard.

Amenities Driving Marketability

As tenant expectations have evolved, so has the amenity arms race. Office buildings must now offer more than just space—they must deliver an experience. Shared amenity floors, rooftop terraces, coworking lounges, and wellness spaces are increasingly seen not as luxuries but as necessary competitive features.

Beyond physical offerings, smart technologies are playing a more significant role in tenant decision-making. From building apps and access control to energy dashboards and digital concierge services, tech-forward environments signal efficiency and prestige.

At Bell Works, the layering of curated amenities—from cafés and coworking to wellness centers and child-friendly services—has created a destination within the suburbs. The concept of delivering community-scale value through workplace and community amenities has led these shared experiences to become part of the tenant brand, employee lifestyle, and asset’s long-term value story.

World’s Fair by Fairgrounds sits right at the entry of Bell Works Chicagoland, providing an anchor tenant that offers a place for tenants to grab coffee and lunch. In addition to World’s Fair, ground-floor tenants like Fitlab, collab, Gather, and other curated amenities add to Bell Works’ community feel.

Sustainability as a Competitive Edge

Sustainability has shifted from a “nice to have“ to a true differentiator. Tenants are increasingly seeking LEED-certified and WELL-rated spaces that align with their environmental, social, and governance (ESG) commitments. These features aren’t just symbolic for institutional users—they’re often tied directly to internal benchmarks or investor reporting requirements.

At the same time, building owners recognize sustainable design’s operational benefits. Energy-efficient systems reduce costs. Water-saving technologies and smart sensors extend asset longevity. Sustainable upgrades aren’t just good for the planet—they’re increasingly necessary for asset performance and marketability.

ML Group routinely integrates sustainable construction practices into renovation and repositioning projects, even when clients aren’t explicitly targeting certification. From material selection to HVAC optimization, our design-build approach helps ensure that sustainability is considered early—where it has the greatest impact on budget and performance.

Financial Implications of Flight to Quality

Behind the aesthetics, amenities, and design strategies driving the flight to quality lies a critical bottom-line consideration: the financials. For both property owners and tenants, decisions about where and how to invest in office space are increasingly tied to performance metrics—ranging from occupancy rates and rent premiums to employee productivity and brand value. While high-quality spaces may carry a more considerable upfront cost, the long-term returns often justify the investment.

Increased Value for Investors

Class A and Trophy assets are demonstrating resilience in a market where Class B and C buildings are sitting vacant and depreciating. Despite broader headwinds in commercial real estate, these high-performing buildings continue to command premium rents and generate leasing activity. The key differentiator isn’t just location anymore. The differentiator is quality.

In cities like New York and Chicago, Class A office space consistently achieves rent premiums of 25% to 30% or more over lower-tier buildings. That gap has grown wider since the pandemic, according to BDO’s market analysis, reflecting tenant willingness to pay more for space that offers modern infrastructure, sustainability features, and rich amenity programs.

For investors, this bifurcation has significant implications. Well-located buildings with the right upgrades are not just more competitive—they’re more profitable. Higher rents, lower vacancy rates, and longer lease terms drive more substantial net operating incomes (NOI) and improved asset valuations.

Even more compelling is the opportunity for value-add plays in a distressed market. Many commercial office assets are trading at a steep discount, particularly when lenders take back underperforming properties. Investors who acquire these buildings at a lower basis can reinvest in renovations and repositioning strategies that materially increase the asset’s performance and long-term value.

ML Group is often brought in early as a design-build partner to help evaluate renovation scope, budget alignment, and market expectations. We’ve found that strategic upgrades—such as modernizing lobbies, introducing shared amenities, or updating HVAC and lighting systems—can dramatically enhance a building’s competitive position and leasing velocity, often at a fraction of the cost of ground-up development.

Cost-Benefit Analysis for Tenants

Tenants, too, are reevaluating what they get from their office space. Moving into a higher-quality building often means more than just paying more per square foot—it means better outcomes across talent, performance, and brand.

Employees in higher-quality spaces often report a stronger emotional connection to their workplace. They feel more supported, energized, and engaged with their teams. These soft benefits have real business consequences: higher retention, improved productivity, and a stronger sense of culture.

From a pure space planning perspective, newer and repositioned buildings are often more efficient. Better layouts, shared amenity spaces, and flexible work zones allow companies to reduce their overall footprint while improving the employee experience. That means tenants can right-size their space without sacrificing functionality or experience.

Operationally, these buildings also deliver cost advantages over time. Newer mechanical systems lower utility costs. Onsite services reduce overhead. Shared meeting spaces lessen the need for underutilized square footage. The result is a more efficient workplace and a more sustainable occupancy strategy.

For tenants and landlords alike, the takeaway is clear: investing in quality is not just about curb appeal. It’s a lever for value that can influence everything from leasing metrics and tenant retention to employee engagement and operating costs.

Looking Ahead: Trends Shaping the Future of Workplaces

The commercial office market continues to evolve, shaped by new expectations around flexibility, experience, and technology. As the dust settles from the pandemic-era upheaval, one thing is clear: the “flight to quality“ is not a short-term trend—it’s a fundamental redefinition of what office space means and how it functions.

Companies are now approaching workplace strategy with greater intentionality. They’re asking how much space they need and what kind of space best supports their culture, goals, and people. Meanwhile, developers and investors are recognizing that differentiation will come not from being the most prominent or most centrally located but from being the most adaptable, inspiring, and connected.

Hybrid Work Models and Flexibility

Hybrid work isn’t going away—it’s evolving. While the balance between in-office and remote work continues to shift, the broader takeaway is that employees now expect choice. They want the ability to work where and how they are most effective, and that expectation is driving demand for more flexible office environments.

In response, employers are designing spaces that reflect this fluidity. Top workplace designers are reconfiguring offices to support collaboration over individual work, with more open team areas, breakout zones, and “third spaces“ that mimic the comfort of home or the energy of a café. At the same time, companies are investing in rooms purpose-built for hybrid meetings, ensuring remote participants are just as present and included as those onsite.

From a design-build perspective, this flexibility must be baked into the core infrastructure—through modular layouts, demountable partitions, mobile furnishings, and scalable tech systems. The office of the future isn’t a fixed asset—it’s an adaptable platform.

Experience Economy Driving Design Choices

Beyond flexibility, the most significant force shaping office design is the experience economy. As with hospitality, retail, and entertainment, people now expect workplaces to offer more than just function—they want environments that inspire, delight, and connect.

This shift is driving a new level of intentionality in workplace design. Offices are being curated to tell a story that reflects a company’s brand, values, and culture. Materials, lighting, circulation, and amenities are orchestrated not just for utility but for emotional resonance. The goal is to create spaces that employees are proud of, feel special to them, and encourage them to come in by choice, not policy.

This is where design-build firms like ML Group are uniquely positioned to deliver value. By aligning design intent with construction execution, we help clients move beyond generic office space to create environments that differentiate—and perform. Whether through branded feature walls, wellness-focused finishes, or immersive amenity spaces, design becomes a competitive advantage.

This trend is particularly visible in high-growth sectors and younger companies that view their physical space as a cultural anchor. But it’s equally relevant for more traditional organizations seeking to modernize their image and improve talent retention.

Technology Integration

Finally, the future of the office is undeniably digital. From access control and air quality monitoring to occupancy sensors and mobile room booking, technology is becoming foundational to both functionality and user experience.

Smart buildings enable landlords to offer higher service levels while improving operational efficiency. Tenants can control lighting, temperature, and desk reservations from their phones. Facilities teams can optimize cleaning and maintenance based on real-time usage. Executives can make space planning decisions with the help of data dashboards and analytics.

More importantly, these technologies are helping to bridge the gap between physical and virtual work. In a hybrid world, tools like integrated AV systems, noise management, and collaboration platforms are essential to keeping distributed teams connected and productive.

For developers and asset managers, investing in tech infrastructure isn’t just about tenant appeal—it’s about future-proofing. Buildings that can adapt to new technologies and support seamless integration will remain relevant far longer than those built for yesterday’s workflows.

ML Group’s offices in Skokie, IL.

Conclusion: Prioritizing Quality as a Strategic Imperative

The commercial office sector is undergoing a seismic transformation—reshaping the buildings themselves and the expectations of those who invest in, operate, and work within them. As hybrid work, employee experience, and economic headwinds converge, the industry is experiencing a clear and accelerating flight to quality.

This shift is not simply about aesthetics or surface-level upgrades. It’s about aligning office space with the deeper needs of today’s workforce and the long-term goals of real estate investors. Tenants are seeking flexible, tech-enabled environments that support collaboration and well-being. Landlords are seeking to reposition underperforming assets to compete with Class A and Trophy buildings. And forward-thinking investors are capitalizing on the opportunity to acquire and transform distressed assets into high-performing workplaces of the future.

One truth remains constant across all of these scenarios: quality matters more than ever. Design, construction, and location are no longer back-of-house considerations—they are strategic levers that directly impact asset value, tenant retention, employee engagement, and brand perception.

ML Group is a design-build firm at the intersection of these priorities. We work alongside developers, owners, and occupiers to translate business goals into built environments—whether through targeted renovations, full repositioning strategies, or the creation of experience-driven office interiors. Our integrated approach helps streamline timelines, reduce risk, and ensure that the vision for a higher-performing workplace is carried through to execution.

The road ahead will not be uniform. Different markets and asset types will respond to these trends in various ways. But one thing is clear: mediocrity is no longer an option. The office of the future is not defined solely by square footage or skyline views—it’s defined by how well it serves the people who use it and the organizations that rely on it.

For stakeholders navigating this transition, the message is simple: prioritize quality. Whether rethinking your workplace or evaluating your next investment, now is the time to act with purpose, invest with intention, and build with the future in mind.

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If you’re a building owner, investor, or real estate manager exploring how to elevate your property—or a company looking to create a more effective, engaging workplace—we’d love to connect. Let’s talk about how ML Group can help you bring quality-driven solutions to life.