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- CCP Commercial Office Digest
Commercial Office Digest
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Callahan Capital Partners is a real estate private equity firm focused exclusively on the origination, acquisition and management of high quality office assets throughout the United States.
Here's a glimpse into what we are reading to shape our view on the evolving office market.
“Property pricing may well have hit bottom.”
Green Street’s Co-Head of Strategic Research noted the bottom may be near for commercial property valuations after the Green Street Commercial Property Price Index decreased another 3% in November. Read more here.
“Tier 1 assets are 88% – 92% occupied across all major office markets…they will continue to garner outsized demand and record rental rates for 2024.”
2024 predictions from a panel of office experts include the continued flight to quality trend, noting that the flight to quality could also mean scarce supply within higher-class office space. Read more here.
“69% of companies say their office is just the right size to meet their current needs.”
VTS commissioned an independent study to pinpoint the needs and expectations of corporate tenants by surveying over 400 business leaders. The first piece of the report, Workplace Strategies, gives insight into how companies are handling return to office and what employers and employees need in order to increase collaboration and productivity. Read more here.
“More than three times as many companies require five days a week in the office than are fully remote, representing a major shift toward in-office work.”
CBRE consulting has been tracking return to work policies for 278 US companies representing a diverse range of sizes, geographic footprints and sectors, and has found companies are increasingly adopting policies that require some in-office attendance. Download the report here.
Charts We are Talking About
The chart below from Newmark’s Q3 U.S. Office Market Overview shows that capital targeting office investment is quite small by comparison to most other asset classes, presenting an interesting contrarian opportunity.
Note from Newmark Research: This chart shows the percent called by vintage year and applied this to the total amount fundraised in each year to calculate the amount of uncalled capital (i.e. dry powder), broken out by main property type. Roughly half the dry powder was at diversified funds. This was allocated to the various property types in proportion to their share of total dry powder, excluding diversified funds. Finally, the dry powder was grossed up assuming 55% leverage would be used.
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