Callahan Capital Partners - Office Real Estate Digest

12/4/2025

Author

Callahan Capital Partners
December 04, 2025

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.

Here's a glimpse into what we are reading to shape our view on the evolving office market.

Callahan Capital Partners and Oak Hill Advisors Complete $700 Million SASB Financing for Bank of America Tower at 110 N Wacker

We’re proud to share that Callahan Capital Partners and Oak Hill Advisors have completed a $700 million single-asset CMBS (SASB) financing for Bank of America Tower at 110 North Wacker Drive in Chicago — one of the most significant office financings completed in recent years. The financing was led by J.P. Morgan and includes Bank of America, Wells Fargo, Goldman Sachs and BMO. This financing reflects not only investor confidence in the strength of 110 N Wacker, but also validation of Callahan’s hands-on, detail-oriented operating approach — one that combines institutional discipline, partnership mindset, and a focus on tenant experience. Please see coverage of this transaction from Bloomberg and CoStar.

“Property is one of the last assets in the U.S. that looks fairly priced and could turn out to be a place to hide if there is an artificial-intelligence bubble.”

The Wall Street Journal argues that U.S. commercial real estate — particularly office and apartment properties — has become “too cheap to ignore,” making now a potentially compelling entry point for investors. With prices depressed, new supply constrained, and cash-flow properties already attracting interest, a window of opportunity presents to invest at more favorable entry points.

“As the wave of debt from the era of low interest rates continues to mature, more distressed commercial real estate sales and foreclosures should be expected in 2026”

A massive wave of CRE debt—delayed for years through maturity extensions and mezzanine infusions—is finally coming due, with $930B maturing in 2026. As rising rates and exhausted “pretend-and-extend” strategies collide, mezzanine layers are beginning to take losses, increasing pressure on lenders to foreclose rather than extend, especially on CBD office and multifamily. Foreclosures already hit a decade-high in early 2025 and are expected to accelerate. With private lenders experiencing capital impairment, distress will surface more visibly—creating forced sales, price discovery, and compelling entry points for well-capitalized office buyers prepared to move into dislocation. Read more from Bisnow here.

Charts We Are Watching

VTS reports demand for office space in San Francisco surged 112% year-over-year and 60% quarter-over-quarter— the strongest growth in the country. Growth was even larger among tech and AI firms, whose office-space searches rose 378% year-over-year. Despite still-high vacancy (roughly one in three offices remain empty), this spike in demand marks an early-stage rebound — a sign that the city may be poised for renewed leasing activity as deals progress from search to lease.

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