Q&A With Adam Johnson: The new office playbook: Early intervention & capital-intensive repositioning

From “The new office playbook: Early intervention & capital-intensive repositioning” – Informa

July 5, 2026

The office market is experiencing a dramatic transformation as distressed assets transition from paralysis to active trading, with transaction volumes surging and a new breed of buyers entering the space. Ahead of IMN’s Bank Special Assets Midwest conference, we spoke to Adam Johnson, Executive Vice President in the Office Services & Capital Markets Group at NAI Hiffman, to understand how lenders and investors are navigating this evolving landscape and what strategies are proving most effective in repositioning distressed office properties.

The early intervention imperative

Lenders and special servicers are learning a critical lesson: timing matters. Johnson emphasizes that waiting too long to address troubled office assets can be costly. When borrowers recognize they’re underwater, they often reduce maintenance and defer capital projects, leaving lenders to inherit deteriorating properties with compounding problems.

The solution lies in proactive engagement, getting ahead of issues 12-24 months before taking control. This means understanding HVAC systems, roof conditions, parking lot maintenance, and interior space quality before problems escalate. Many lenders haven’t physically inspected properties since initial underwriting, creating blind spots that can derail repositioning efforts. By funding tenant improvements, leasing commissions, and critical capital projects early, lenders can maintain property value and tenant confidence, ultimately achieving more successful outcomes when they do take control.

A new buyer landscape emerges

The office investment market has undergone a fundamental shift in who’s buying. Institutional capital has largely retreated, replaced by what Johnson calls “widget makers”—private capital sources from diverse business backgrounds who view office as an opportunistic bet with excess capital. These buyers might be doctors, logistics company owners, or successful entrepreneurs from various industries, all attracted by dramatically reduced pricing.

Buildings that once commanded $150-200 million checks now sell for $25 million, opening the door to this new investor class. While these buyers lack the institutional backing of previous market cycles, they bring fresh energy and capital to properties that desperately need both. As market conditions improve, the buyer profile will likely evolve again, but for now, these opportunistic investors are filling a critical gap and driving market momentum.

Transaction velocity signals market confidence

The numbers tell a compelling story of market revival. In downtown Chicago, office sales volume jumped from just 1.9 million square feet ($213 million) in 2023 to 9.5 million square feet ($660 million) in 2024. The trend accelerated further, with the most recent 12-month period seeing 12 million square feet trade for $675 million, and the last six months alone accounting for 10 million square feet at nearly $700 million.

This surge reflects two converging forces: lenders finally ready to accept market pricing after years of write-downs, and buyers gaining confidence as they observe successful repositioning efforts. What was once one building per quarter has become 1-2 transactions per week. This “herd mentality” creates positive momentum, as more buildings sell and receive fresh capital, more investors feel comfortable entering the market, creating a self-reinforcing cycle of activity and optimism.

Creating energy and momentum

Beyond financial engineering, successful office repositioning requires creating tangible energy within buildings and surrounding areas. Johnson emphasizes that tenants and employees can feel the difference when they walk into a refreshed property with engaged ownership, active management, and vibrant common spaces. This intangible quality has become crucial for attracting tenants who want to draw employees back to the office.

National leasing velocity is up 25%, led by traditionally strong markets like New York and San Francisco. As more buildings receive capital infusions and create compelling work environments, the competitive landscape improves. The goal isn’t just fixing individual buildings but revitalizing entire streets and districts, creating the critical mass of activity and amenities that make office districts attractive again.

Want to learn more about how lenders and investors are navigating the distressed office market and creating value from challenged assets? Watch the full interview below:

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About NAI Hiffman:

NAI Hiffman is one of the largest independent commercial real estate services firms in the US, with a primary focus on metropolitan Chicago, and part of the NAI Global network. We provide institutional and private leasing, property management, tenant representation, capital markets, project services, research, and marketing services for owners and occupiers of commercial real estate. To meet our clients’ growing needs outside of our exclusive NAI Hiffman territory, we launched Hiffman National, our dedicated property solutions division, which provides property management, project services, and property accounting services across the country. NAI Hiffman | Hiffman National is an award winning company headquartered in suburban Chicago, with more than 275 employees strategically located throughout North America.

About Hiffman National:

Hiffman National is one of the US’s largest independent commercial real estate property management firms, providing institutional and private clients exceptional customized solutions for property management, project management, property accounting, lease administration, marketing, and research. The firm’s comprehensive property management platform and attentive approach to service contribute to successful life-long relationships and client satisfaction. As a nationally bestowed Top Workplace, and recognized CRE award winner, Hiffman National is headquartered in suburban Chicago, with more than 275 employees nationally and an additional six hub locations and 25 satellite offices across North America.