Callahan Capital Partners Commercial Office Digest

Callahan Capital Partners is a real estate private equity firm and operator focused exclusively on the origination, acquisition and management of high quality office assets in select urban markets throughout the United States.

“For hot properties, the balance of power is shifting back to office landlords in ways not often seen since the pandemic emptied out offices in 2020.“

The WSJ reports on the lack of high quality office space nationally, despite high vacancy numbers on the whole, noting that “tenants in cities hardest-hit by the glut of space, such as Washington, D.C., and Chicago, are shocked by the few choices on the top shelf.” Tenants occupied 22% more top-tier office space in the third quarter of last year than they did at the end of 2019, evidence of the continued flight to quality. Read the article here.

“If it was “get rich” money, I’d probably do office.”

In a moderated discussion with Willy Walker, Dr. Peter Linneman makes predictions on asset class returns, naming office as the “get rich” investment play. While Linneman clarifies he wouldn’t invest in just any office, he believes NOI problems will resolve over time and capital will come back to the stronger properties as it did in retail. See the clip starting at 1:02:45 here.

“After a 16% quarter over quarter decline, the total amount of U.S. office space under construction is below 30M sf for the first time since 2011.”

Cushman & Wakefield’s Q4 Office MarketBeat notes the drastic slowdown in office development. The softening of the supply-side pressure will insulate existing higher-quality assets in the coming years.

Charts We Are Talking About

JLL reports office leasing demand has nearly returned to pre-pandemic levels with Q4 2024 leasing activity at 92% of the pre-pandemic average. Additionally, Q4 was the first quarter of positive net absorption since Q4 2021. You can find this graph and further commentary in the JLL U.S. Office Dynamics report from Q4.

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