CCP Commercial Office Digest

Commercial Office Digest

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.

“In today’s global technology revolution, we believe in-person connections paired with a flexible approach are critical to drive innovation and value differentiation.”

Dell is in the news as an example of the growing trend of employers announcing monitoring of in-office attendance. Increasingly companies are emphasizing that in person collaboration and innovation are important for company productivity. Read more here.

“Tenants are very focused on landlords who can put additional capital into the buildings because they want to get their employees back.”

A WSJ article on the increase of office loan defaults highlights that in today’s market, tenants looking to sign new leases are “closely scrutinizing their landlords’ financial health”. Tenants want to ensure the buildings they are entering are on good financial footing and landlords have the ability to add promised amenities. This trend is narrowing the amount of viable building candidates for tenants looking to relocate. Read more here.

"Institutions typically come in after the market has clearly bottomed…They’re more conservative than other buyer types, but last year almost none of them were looking at office and this year, they're discussing it. That's not to say they're buying yet, but there's progress in the fact that they're looking again."

While limited action, there is more conversation about re-investment in office assets from institutions as office pricing continues to fall. Blackstone has even said the firm is considering investment in “super-high-quality” office buildings at depressed prices. Read more here.

Charts We Are Talking About

In the Q1 2024 Office Outlook, JLL reports that the pipeline of distressed office assets continues to broaden, with 6.7% of office CMBS debt delinquent as of the end of March and an additional 3.9% in special servicing. It is likely that foreclosure sales will be more common in 2024 amid the growing wave of delinquencies and elevated maturities. Download the JLL Q1 US Office Outlook report here.

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