Class A office interest, is that net new demand or the same tenants moving up?

Trying to decide whether the office uptick people are pointing at is something a service business should build around, and the answer depends entirely on what's driving it.

The forecasts I read describe renewed interest in office, led by strong Class A product, after several years of pandemic-driven weakness. Two readings of that, with different consequences.

Reading one is flight to quality. Total occupied square footage is flat or shrinking, and tenants leaving 1990s Class B buildings for newer product with better amenities. Under that reading the money shows up as fit-out and repositioning spend, not as ground-up starts, and the Class B owners are the ones eating the loss. The work exists, it's renovation-shaped, and it comes with landlord concession packages funding it.

Reading two is that headcount and space per employee have stabilized enough that absorption is genuinely turning, in which case selective ground-up Class A pencils again in a handful of markets and the pipeline that's been frozen since 2020 starts moving.

The test I'd want is whether new Class A leases in a given submarket are net additions or backfills of space the same tenant just vacated somewhere else. That data exists at the brokerage level and I don't have clean access to it.

The cost side doesn't care which reading is right. Tariffs on steel-heavy scopes and elevated financing costs sit on top of either story, and they're why marginal office projects stall while well-sponsored ones proceed. Curious which reading the room holds.