There are more than three times as many AI companies (825) in the Bay Area as the next most concentrated market, New York City, with 237.

Even more so, Cushman & Wakefield anticipates a 200 percent growth for GenAI companies over the next two years in the Bay Area. In its latest report, AI Genesis | The Role of Generative AI in Transforming Bay Area CRE, Cushman & Wakefield broadly defines AI and includes semiconductor companies and other tech companies deploying AI.

Last year, 82 percent of global Gen AI venture capital landed in San Francisco.

Robert Sammons, Cushman & Wakefield senior research director and co-author of the report, told Commercial Property Executive that what had primarily started in San Francisco proper has spread more recently across the Bay Area region.

“Silicon Valley is certainly in the spotlight, largely because of AI divisions at the Big Tech players that are headquartered there, but also increasingly because of standalone AI companies popping up in the area,” Sammons said.

Given the depth of tech talent in the Bay Area, the focus will likely remain within the region, he anticipates. “However, like most tech sectors in the past, the GenAI phenomenon will likely spread to other markets as well—we already see that in major global cities such as New York and London. Thus far, it’s the search for talent leading that charge, but in the future, it could be about cost savings.”

READ ALSO: Why AI Firms Are Taking a Measured Approach to Office Leasing

Sammons said what surprised him most about the report was the sheer number of GenAI companies based in the Bay Area region—from the very early seed stage to the later stage to divisions of Big Tech.

“It’s still overwhelmingly a Bay Area phenomenon,” he said. “Also surprising was that there was more GenAI leasing activity in Silicon Valley than in San Francisco in 2024 as well as more unique job postings in Silicon Valley than in San Francisco in 2024.”

An office market rebound

The concentration of artificial intelligence companies in the San Francisco Bay Area is helping drive a market rebound, being a catalyst to lift the region of its real estate downturn, according to Avison Young VP Tyler Paratte, based in the San Francisco office.

“The correlation between companies receiving funding and leasing office space has drastically improved, leading to increased office attendance, revitalizing downtown cores and creating expanded opportunities for adjacent industries as these companies grow.”

Paratte said San Francisco has historically been a boom or bust market, heavily dependent on the technology industry.

“Not only does the data show the market is recovering, but there’s also a shared sentiment of being on the precipice of a boom, with AI being the engine that renewed momentum in the Bay Area,” he said.

AI firms’ leasing activity

JLL also sees a heavy influx of AI-based companies. Its data focuses on firms dedicated to the AI vertical. According to Chris Pham, JLL senior analyst, the Bay Area’s dominance in AI is echoed in JLL’s research in leasing activity and job posting trends.

He told CPE that new AI deals in the Bay Area comprise nearly 40 percent of the AI deal count this year, primarily from new startups. San Francisco alone saw 30 percent of the deal count last year from AI startups. Monthly AI job postings have nearly doubled year-over-year as companies emphasize AI positions.

He said AI companies occupy different property types beyond just office space, which accounts for 49 percent of leasing activity. Lab space accounts for 23 percent, flex space for 10 percent and industrial for 18 percent.

“AI is centered mainly in the Bay Area, eclipsing all U.S. and global markets for several reasons, including that it has the highest location quotient for AI in the U.S. at 9.5 (meaning AI talent is 9.5x more concentrated compared to the national average).

The Bay Area has 20.2 percent of U.S. AI talent, far ahead of Seattle (9 percent) and New York City (7 percent). The Bay Area is also near major AI research institutions, innovation companies and venture capital.

“[The Bay Area] has a strong talent pipeline from local universities, including UC-Berkeley and Stanford which are among the top 5 institutions for AI graduates,” Pham said.

The Bay Area has been a proving ground for tech startups for more than 30 years, so we’re excited to see the growing demand for AI, Katy Redmond, JLL senior managing & tech sector lead of leasing advisory, told CPE.

“This growth is a leading indicator for optimism for other AI hub markets for startups and innovation, such as New York City, Seattle and Washington, D.C.,” she said.

In 2024, AI companies leased 420,000 square feet in New York City, including new secondary offices opened by San Francisco-based startups.

The post How Generative AI Is Reshaping Bay Area CRE appeared first on Commercial Property Executive.

CBRE Group’s Industrious has signed its newest location in Manhattan, Industrious Lex & E 50th St. Starting this fall, the flex office provider will occupy the entire second floor, spanning 20,000 square feet, at 560 Lexington Ave. in Midtown East. Cushman & Wakefield negotiated on behalf of the tenant, while landlord Rudin had in-house representation.

The new space will have 158 seats available for solo entrepreneurs, growing teams and established businesses. The amenity suite comes with a new café, lounge, conferencing area and outdoor space, currently created by Rudin within the tower.

The Lexington location will join Industrious’ other New York City spaces: Tower 49, at 12 E. 49th St.; Midtown on 50th St, at 135 W. 50th St.; Carnegie Hall, at 152 W. 57th St.; 1411 Broadway; Bryant Park off Fifth, at 25 W. 39th St.; 261 Madison; and Penn 1, at 250 W. 34th St.

Cushman & Wakefield’s Justin Halpern, Ed Wartels and Ben Bouganim assisted Industrious. Kevin Daly of Rudin represented building ownership.

A Midtown Manhattan office building

Built in 1980 and cosmetically renovated in 2015, the office building at 560 Lexington Ave. features floorplates averaging 17,204 square feet and 3,500 square feet of retail space, according to CommercialEdge information. The 22-story high-rise is easily accessible to public transit and Grand Central.

The tower is LEED Silver-certified and gold-certified by WiredScore, featuring a building operation system that optimizes it through AI to reduce emissions. The Class A property recently underwent a modernization program that involved creating a new lobby, adding new elevator cabs and constructing an on-site, glass-enclosed subway entrance for the nearby train station.

State of the NYC coworking market

CommercialEdge listed Manhattan as the top coworking market in the U.S. for total square footage as of February. Chicago and Los Angeles were the other two metros on the podium.

Michael T. Cohen, a principal with Williams Equities, which owns and operates approximately 3.5 million square feet of NYC office space, told Commercial Property Executive, “Coworking is back. Once again, it is part of the mix of tenants expanding into and absorbing office space in Manhattan.”

He added that the epoch of coworking firms “signing a market-rate lease and absorbing the lion’s share of the risk is gone for good.” Similarly, few New York City building owners have been willing to accept the so-called “management deals” under which they enjoy the “upsides and downsides.”

As such, the sophisticated coworking operators have developed new leasing models that involve sharing their profits and losses with the landlord, Cohen mentioned.

READ ALSO: Where’s the Coworking Sector Headed?

“WeWork appears to be making a comeback by leveraging its occupier relationships and taking space where it has a pre-existing commitment to fill. On the other hand, Industrious is exploiting the demand for office suite occupiers and landlords looking to add an amenity to their building and diversify their product mix.”

Cohen said IWG and others are all scouting suitable locations across the city.

“You can expect many coworking lease announcements as the year progresses,” he added.

Adapting to businesses’ needs

Flex space providers’ ability to adapt to businesses’ evolving needs and deliver high-quality office and conference spaces has made them a valued partner for local banks, hedge funds and companies “that simply don’t have enough space for all of their employees,” said Jeff Gural, chairman of GFP Real Estate.

Lee Brodsky, CEO of BEB Capital, told CPE, “While many coworking operators have come and gone, flexible office space has remained essential,” underscoring that today’s hybrid and remote workers “seek spaces that foster community, productivity and connection—beyond a home office or coffee shop.”

Recognizing this demand, BEB Capital launched BEB Work at 26 Harbor Park Drive in Long Island, creating a coworking space designed for professionals to work alongside like-minded individuals in the community.

“Since our February launch, we’ve seen strong demand for private offices and expect momentum to continue growing in the months ahead,” Brodsky concluded.

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Panelists speaking on the first day of the 2025 Real Estate Technology Conference, hosted in Las Vegas, revealed refined, precise tastes for technology, particularly in the realm of artificial intelligence. These discussions occurred at the heels of recent breakthroughs in agentic artificial intelligence and a valuation of the industry at more than $180 billion.

From tenant experience app features to construction design software preferences, panelists from across the industry are well aware of what works and what doesn’t.

Artificial intelligence: CRE’s new cell phone?

At a keynote discussion titled Investing in Innovation: Building Strategy to transform Real Estate, panelists from the office, multifamily and software sectors agreed that the use of artificial intelligence has become more of a necessity for employees looking to maximize productivity than another tool at their disposal.

One area where this is present is lead interception for leasing at office properties; something as simple as a chatbot can respond to inquiries on a perpetual basis, while an agentic model may be capable of autonomously communicating with potential tenants. “It’s a game-changer that we couldn’t do with humans fast enough,” said Andrew Segal, chairman & CEO of Boxer Property.

The humans at Boxer Property probably agree. According to Segal, they went from using some form of AI platform roughly 500 times a month in September of last year to more than 2,000 times in January. Where efficiency is concerned, “when you combine it with offshoring, it’s not an option anymore; it’s like saying you are not going to use a computer,” Segal said.

Yao Morin, JLL’s technology officer, compared the adoption at her firm which has developed a proprietary GPT model to the ubiquity of cell phones. “Nowadays, you can’t go without your phone,” Morin said.

Of course, universally adopting artificial intelligence for nearly every part of a workflow is easier said than done. A key question was how to get decades-long employees to embrace the technologies. Morin prefers a brass-tacks approach, where existing users share the way they use these technologies with the rest of their team.

Others mix carrots and sticks. Konrad Koczwara, ElevateOS’ founder & CEO, prefers the former. “If you have a group of 10 people, you will have a group of three that is going to be curious, and those are the ones you should incentivize and reward to train the rest,” Koczwara told the panel.

Segal, on the other hand, is all in. “You can get in line, or you can use it to write your resume,” he quipped. “It’s not going to replace everyone’s jobs, but it will make them a lot more productive,” Segal said.

Optimized offices

During a discussion about the best ways to keep office buildings active and occupied, slumped occupancy and space activations were viewed not so much as the result of lackluster amenities or programming, but suboptimal adoptions of technology.

A prime example of this is tenant experience apps, often used from filing work orders to reserving conference space. Despite all the programming and amenity spaces that they are capable of showcasing, “they’re not getting the traction of tenants,” said Maja Sofic, first vice president of property management at CIM Group.

Sometimes, this is outside operators’ control; developers making the applications one-stop shops for everything from work orders to lunch reservations can often be counter-intuitive if they include sensitive payment information that some tenants are forbidden from divulging.

“It’s a struggle for people to even download the app, and that is because of the companies they have,” said Todd Januzzi, president of Paramount Group Inc., an office REIT with holdings in New York City and San Francisco. “We have some household name banks, with 4,000 people in a building not downloading the app; law firms won’t (touch) it, and financial services won’t use wallet or payment features” Januzzi added.

READ ALSO: Office Owners Scale Back Concessions

But there are some workarounds. Januzzi’s company thought to make visitor access to amenity spaces exclusive to a tenant experience app. “They sign a waiver saying that they won’t be nefarious, and they’re in,” But without it, you’re not going anywhere,” Januzzi detailed.

Sofic, on the other hand, sees the use of apps that can book spaces at multiple locations as providing employees with a degree of flexibility that will make in-person office work more appealing. “There’s so much traction in that space of jumping on your phone and plugging in; that gives the modern tenant that flexibility,” Sofic said.

Builders tough it out

If there is one industry that is being hampered the most by the current macroeconomic environment, it’s construction; labor shortages and potentially hiked supply costs are putting a thorn in the side of builders looking to go vertical.

But necessity is the mother of invention, and the digital environment, particularly the realms of automation and data analytics, give developers an edge when it comes to making projects faster and more efficient.

AI algorithms can potentially evaluate innumerable iterations of a building design in a matter of seconds, while some large language models can mimic the expertise of retired welding experts. Almost by accident, some of the technologies are uniquely suited to the present moment; “tariffs on or off, if someone said they are going from concrete to steel, with some of the tech you are seeing today, you can make your pivot a lot quicker,” said Thomas Scarangello, managing principal & senior advisor of Thornton Tomasetti.

One consequence that Scarangello has observed is a leveling of the architects’ and construction firms’ playing fields, giving smaller firms a leg up. “Eight years ago, you had to build your own data team and extract data from your systems, but if you look to today, solutions have now come out that do that work for you, and serve you the data in a more clean and transformed matter.”

But it’s still up to the data teams to make the best decisions using them. “Data is the new oil, but it’s more of a crude oil. We need to refine it into something useful,” Scarangello said.

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At the end of 2024, the biggest office metro in the country continued to struggle with new supply, while investment activity picked up pace since 2023, according to CommercialEdge data. Manhattan transaction trends are similar to the sector’s performance on a national level.

Considering the evolution of return-to-office policies, rising maturing debt and high construction costs, the metro showed mixed signals. The borough’s total sales volume for 2024 was the largest in the country and marked a 76 percent year-over-year increase. However, with the increase in discount deals, the average sale price per square foot dipped to $363.62 per square foot.

Manhattan office sales prices dip

In 2024, 11.3 million square feet of office space across 47 properties changed ownership in Manhattan, adding up to a total volume of $4.1 billion. Last year’s investment volume marked a 76 percent jump, compared to 2023’s total. Among gateway markets, Manhattan kept its leading position, followed by Washington, D.C., with $3 billion in deals, and Los Angeles, with $2.1 billion.

Investor appetite in the borough increased consistently throughout last year—from the $99.2 million recorded at the end of the first quarter, to the fourth quarter’s $1.4 billion. One of Manhattan’s biggest transactions last year was Bloomberg Philanthropies’ $560 million acquisition of 980 Madison Ave. The company picked up the 118,635-square-foot asset in June after the seller, RFR Realty, defaulted on a $197.6 million loan.

Office assets in the metro traded at an average sale price of $363.62 per square foot—significantly above the national average of $171.61 per square foot, but much lower than in 2023. Manhattan registered the second-highest prices among gateway cities, with Miami emerging as the most expensive metro in the U.S., at $395.24 per square foot. San Francisco came in third, with $345.22 per square foot.

Since the start of 2025, eight properties amounting to approximately 3 million square feet traded in the metro. The sales volume added up to $1.4 billion, at an average of $462.05 per square foot. The biggest transaction so far this year was Haddad Brands’ $357 million acquisition of Two Park Avenue in NoMad. Morgan Stanley sold the 1.1 million-square-foot high-rise.

A steady pipeline with large projects

As of December, Manhattan’s under-construction pipeline included 2.7 million square feet of competitive space, representing 0.6 percent of existing stock—lower than the national average of 0.8 percent. Among gateway markets, Boston led with 3.4 percent, followed by San Francisco’s 2.3 percent.

In terms of underway stock, Manhattan placed sixth in the nation. Across similar markets, Boston led the rankings with 8.7 million square feet, followed by San Francisco (3.8 million square feet) and Dallas (2.9 million square feet), while the borough outperformed Los Angeles and Miami, with 1.9 million square feet ad 1.8 million square feet, respectively.

The list of significant office projects underway remained unchanged since our last update. The largest project under construction is the upcoming global headquarters of JPMorgan Chase, at 270 Park Ave. in the Plaza District. The company broke ground on the 2.5 million-square-foot, Class A+ office tower in 2020, with estimated completion by the end of August 2025.

Construction starts crash

At the end of 2024, developers delivered 1.4 million square feet across four properties in Manhattan, representing 0.3 percent of existing stock and reflecting a 75.7 percent year-over-year drop. Among gateway markets, Boston topped the charts with 6.7 million square feet completed, marking a 27.3 percent annual increase, while most similar markets registered notable declines, including Washington, D.C.’s 50 percent dip.

Notably, The Walt Disney Co.’s New York new headquarters dubbed 7 Hudson Square, came online last year. Totaling 1.3 million square feet, this property was completed in August 2024, with Silverstein Properties as developer.

Meanwhile, only two projects broke ground in the borough, comprising 356,000 square feet and marking a massive 594 percent year-over-year decline. When adding projects in planning stages to the relative-to-total-stock pipeline, the figure reached 3 percent—just north of to the national average of 2.9 percent and on par with Los Angeles.

Manhattan rents decreased in 2024

As of December, Manhattan’s office vacancy rate stood at 16.6 percent—below the national figure of 19.8 percent and up 20 basis points year-over-year. The borough’s rate was lower than in Boston (17 percent) and Washington, D.C. (18.5 percent). Miami posted the lowest office vacancy in the nation at 15.2 percent, while San Francisco’s 28.8 percent was on the other side of the spectrum.

Since our previous update, Manhattan fell from its leading position as the priciest metro for office leasing. As of December, asking rents averaged $68.42 per square foot—still more than double the national average of $33.11 per square foot. San Francisco’s $70.56 per square foot took the lead.

One of the largest leases of 2024 was Bloomberg’s 924,876-square-foot renewal and expansion at 919 Third Ave.

Office-to-residential policies in NYC

According to CBiz, the value of office spaces in New York City dropped by 40 percent since the pandemic, while one in five buildings vacant.

In early December 2024, the City Council adopted the City of Yes Housing Opportunity, enabling owners with underutilized office assets built between 1961 and 1991 to convert them to residential buildings with multiple types of housing, according to the city’s website.

Introduced in 2023, the Office Conversion Accelerator Program is another option, assisting landlords in conversion projects designed to generate a minimum of 50 residential units. Additionally, the state also launched two new exemption programs for the 2025 fiscal year, offering tax incentives to developers that propose conversions with at least 25 percent in affordable housing units.

CommercialEdge’s Conversion Feasibility Index, a tool launched earlier last year, helps evaluate a building’s potential for residential repurposing. At the start of this year, Manhattan had 907 buildings with a CFI score between 90 and 100, placing them in the Tier I category.

In June last year, Sunlight Development purchased an office building at 95 Madison Ave., also known as the Emmett Building, with plans to convert it into a 70-unit residential building. The developer paid $65 million for the 141,161-square-foot, Class B office asset, and secured a $20 million loan held by Bank Hapoalim. This 16-story, historic building holds a CFI score of 93, CommercialEdge shows.

Coworking constantly improves

The coworking sector expanded in Manhattan through 2024, its 285 locations totaling 11.6 million square feet remaining the largest inventory in the country. The borough's flex office supply saw a notable increase from the 9.5 million square feet recorded at the end of 2023.

Other markets with large coworking inventories included Chicago (7.1 million square feet), Los Angeles (6.5 million square feet) and Dallas (5.2 million square feet). Manhattan’s share of flex space as percentage of total leasable office space stood at 2.3 percent—above the national figure of 2 percent. Among gateway markets, Miami led the ranking with a 3.8 percent figure.

At the end of last year, WeWork remained the flex office provider with the largest footprint in Manhattan, with operations totaling 2.6 million square feet across 29 locations. Industrious (1.5 million square feet), Regus (697,950 square feet), Convene (603,800 square feet) and Spaces (567,000 square feet) also maintained a strong presences in the borough.

The post Manhattan Office Sector Leads in Sales Volume as Prices Dip appeared first on Commercial Property Executive.

For top tier assets, base and effective rents are up by 3.1 percent and 5.2 percent, respectively, since 2023. Base and effective rents for Class B/C office buildings have dropped by 5.7 percent and 1.2 percent.

CBRE analyzed 4,350 new lease comparables across the Atlanta, Boston, Chicago, Dallas-Fort Worth, Denver, Houston, Los Angeles, Manhattan, Philadelphia, San Francisco, Seattle and Washington, D.C., markets.

READ ALSO: Net Effective Office Costs Edge Up

Top-quality, amenity-laden office buildings in prime locations are in limited supply and high demand. The report showed a growing rent base and fewer concessions for these properties’ tenants last year. Incentives include rent-free months and landlord-funded office space improvements.

“We expect those owners of prime buildings to continue to dial back concessions over the next 24 months, especially given the dwindling supply of premium office space coupled with a lack of new construction,” Mike Watts, CBRE president of Americas investor leasing, told Commercial Property Executive.

Top-tier buildings are commanding a premium, especially given that landlords are offering tenant-improvement allowances to accommodate high-quality fit-outs.

A bifurcated office market

Meanwhile, effective rents for lower-tier office buildings are slipping steadily. CBRE showed that landlords kept base rents relatively flat until the second half of 2024. At that point, financing requirements came into play in order to maintain property values.

Landlord concession packages topped out in 2023; however, they are still greater than in 2019.

For the lower-tiered offices, the tenants have the upper hand, given the high volume of available assets. Conversely, owners of the highest-quality buildings in the most sought-after locations are in great bargaining shape, given the flight-to-quality trend and diminishing new supply.

Last month, CommercialEdge reported that office prices have retreated and discounts are plentiful. The average price fell 11 percent year-over-year due to uncertainty and the continued domination of remote and hybrid work schedules, according to its February report.

In 2023, prices fell by 24 percent and since 2019, office values have dropped by 37 percent.

The post Office Owners Scale Back Concessions appeared first on Commercial Property Executive.

Two tenants have signed leases at 55 Broadway in Lower Manhattan, totaling more than 21,500 square feet. CBRE represented landlord Harbor Group International in both transactions.

Inclusiv, a network of community development credit unions, has signed a 10,986-square-foot lease and will occupy the entire 29th floor. The tenant currently has office space at 39 Broadway, Commercial Observer reported. Avison Young Principal Tom Kaufman worked on behalf of Inclusiv in the transaction.

CSA Group NY Architects and Engineers also renewed its 10,557-square-foot office space on the property’s 14th floor for an additional 10 years. This deal was brokered directly.

READ ALSO: What’s Defining Office in 2025?

The property’s tenant roster includes RAL Cos., Syscom Global Solutions Inc. and Bond Collective, among others, CommercialEdge shows. The high-rise is currently 93 percent leased.

In 2024, renewals made up 68 percent of leases, marking a 10 percent increase from the previous year, a new CBRE report shows. Over half of the renewing tenants kept their existing space, while nearly a third expanded. Manhattan dominated the market, securing the largest share of the 100 top leases of last year.

A renovated tower in the Financial District

Located between Exchange Alley and Morris Street in the Financial District, the Class A 55 Broadway is near Interstate 478 and is less than one mile from World Trade Center. JFK International Airport is some 14 miles away.

The 358,000-square-foot building has been under the Harbor Group International ownership since 2014, when the company acquired the asset for $157.3 million from Broad Street Development, according to CommercialEdge. Later in 2017, Savanna and Paramount Group acquired a 45 percent ownership stake in the property. Last year, the office tower became subject to a $71.6 million loan, originated by AIG, the same source shows.

Completed in 1982, the 32-story high-rise underwent renovations in 2013. The building features floorplates ranging between 11,000 and 17,000 square feet, eight passenger elevators and 15,000 square feet of retail space.

The CBRE team representing the landlord included Executive Vice President Brad Gerla, Senior Vice President Jonathan Cope and Vice President Hayden Pascal.

The post Harbor Group Inks 2 Leases in Lower Manhattan appeared first on Commercial Property Executive.

Comprised of two interconnected buildings located at 200 Elm St. and 695 E. Main St., The Link totals approximately 560,000 square feet. A.M. Property acquired the asset from Building and Land Technology for $235 million in December 2021, according to CommercialEdge. In 2024, Parkview Financial provided a $102.5 million bridge loan that was due to mature this December, the same source shows.

Built in 1984, The Link recently underwent $50 million in renovations to upgrade the complex and reposition it for the needs of today’s workforce. Improvements included a new lobby, modernized elevators and upgraded common areas.

The eight-story campus now has a 20,000-square-foot cafeteria and 9,000-square-foot fitness center. Other amenities include a conference center, outdoor courtyard with seating, fire pits and entertainment areas. The two buildings share a parking structure with 1,016 spaces.

Located in Stamford’s central business district, the transit-oriented property has direct access to Interstate 95 and a shuttle to the nearby Metro-North Commuter Railroad station.

Newmark Co-Head of Global Debt & Structured Finance Jordan Roeschlaub, together with Vice Chairmen Nick Scribani and Chris Kramer, led the team representing the borrower.

Leasing activity at The Link

The comprehensive renovations have resulted in significant leasing activity. Nearly 400,000 square feet of new commitments and renewals have been completed in the past two years at the campus that is currently 92 percent leased.

Indeed, the global job matching and hiring platform, agreed to lease 124,180 square feet at The Link later this year, when it relocates from 177 Broad St. The space will be the company’s new global co-headquarters and house primarily sales and client success teams.

Global manufacturer Henkel signed a renewal for a reconfigured 84,046 square feet. Diageo, the London-based beverage company that moved to the site in 2021, signed an early renewal for its 57,551 square feet. RSM, a tax, assurance and consulting firm, also signed a long-term renewal for 23,944 square feet to stay at The Link. Another firm that renewed its lease was Ascot Group, a global specialty insurance company that has 23,944 square feet.

Other major tenants include Deloitte, McDonald’s and Webster Bank, which extended its lease and expanded its headquarters by 23,031 square feet for a total of 45,979 square feet in March 2022.

The post AM Property JV Lands $133M for Stamford Trophy Asset appeared first on Commercial Property Executive.

Fort Street Partners, in joint venture with Cumming Capital Management, has acquired Lehi Spectrum I and II, Utah Business reported. The Boyer Co. previously owned the 257,000-square-foot Class A office building duo, located in Lehi, Utah.

Woodley Real Estate and Newmark brokered the deal on behalf of the seller.

Lehi Spectrum I is at 1650 W. Digital Drive, while Lehi Spectrum II is at 1550 W. Digital Drive. Completed between 2018 and 2020, both properties were developed by The Boyer Co. as Podium’s headquarters, which currently occupies space at Lehi Spectrum I. The second building’s tenant roster includes Vivint, Waystar and DevMountain.

READ ALSO: Beyond Aesthetics: Prioritizing Well-Being in Workplace Design

Situated on a 14-acre lot across the Interstate 15 corridor, the properties allow easy access through the Silicon Slopes tech hub. Provo, Utah, is 19 miles away and Salt Lake City is 26 miles from Lehi Spectrum. Meanwhile, Salt Lake City International Airport is some 30 miles away.

Both office buildings rise five floors and include 25,000-square-foot floorplates, three passenger elevators each and a total of 1,159 vehicle parking spots, according to CommercialEdge. Amenities feature a fitness center, locker rooms with showers, a daycare, pickleball courts, an open space auditorium and food services.

Salt Lake City’s rise in office transactions

Office sales in Salt Lake City generated $472 million in 2024, according to fourth quarter Cushman & Wakefield report on the metro’s investment activity. There were 46 office assets totaling 2.4 million square feet that traded at an average sale price of $202 per square foot.

The investment activity increased since the $370 million recorded during the previous year, but the Salt Lake City metro is also expected to continue to see a rise in discount deals, reflecting current national office real estate trends.

The post Fort Street JV Picks Up Office Duo in Salt Lake City appeared first on Commercial Property Executive.

The children’s apparel company, owned by Berkshire Hathaway, was already leasing the entire seventh floor at the 26-story tower. With this deal, it will also fully occupy the 31,663-square-foot sixth floor, bringing its total footprint at the property to 63,417 square feet, Commercial Observer reported.

The property is now 77 percent leased. Its anchor tenant Metropolitan Commercial Bank signed a renewal and expansion agreement back in December, bringing its total footprint to 81,979 square feet. Other notable tenants include The Ayers Group, Riveria Investment Group, New York Bankers Association, Windsor Properties, Flushing Bank and Keller Williams, CommercialEdge shows.

Global Holdings acquired the building in 1991 for $104.5 million from The Equitable Life Assurance Society of The United States, according to CommercialEdge data. The tower is currently subject to a $250 million loan held by Landesbank Baden-Wurttemberg Bank, the same source shows.

The JLL team included Vice Chairman Paul Glickman, Senior Vice President Diana Biasotti, Associate Vice President Kristen Morgan and Associate Harrison Potter.

An upcoming revamped high-rise

Originally designed by Emery Roth & Sons, the office tower dates to 1953 and underwent cosmetic renovations in 2005. The property features 12,000 square feet of first-floor retail space, a fitness center and 100 vehicle parking spots.

The owner is currently implementing a $30 million capital improvement program within the building, with renovations led by VOCON. Plans include an updated lobby, amenity center, the addition of a conference center, lounge, barber shop and salon, as well as golf simulator and bowling valley. Renovations are expected to reach completion during summer next year.

Situated within the borough’s Murray Hill neighborhood, 99 Park Ave. is close to Grand Central Terminal and to Bryant Park, while John F. Kennedy International Airport is 15 miles away.

Manhattan’s vacancy lowest among the Northeast

The national office vacancy rate reached 19.7 percent in January, up 180 basis points year-over-year, according to the latest CommercialEdge report. Every office market experienced jumps in vacancies, with five of the top 25 U.S. metros recording surges of more than 500 basis points.

Despite this, in the first month of 2025, the Northeastern markets kept their rates below the national average. Manhattan’s office real estate trends show that the metro registered the lowest vacancy rate in this region, with 16.6 percent as of January, marking only a 10-basis-point increase.

Notable leases in the borough signed since the start of the year include Newmark’s recent 15-year renewal and expansion at 125 Park Ave. The company increased its footprint to 184,239 square feet at the designated New York City landmark, owned by SL Green.

In January, that same landlord inked a 92,663-square-foot deal at another property. IBM expanded and renewed its presence at One Madison Ave., in a deal brokered by JLL.

The post Global Holdings Inks 63 KSF Extension at Manhattan Tower appeared first on Commercial Property Executive.

The Metroplex’s office sector remained steady in 2024, with more than 2.9 million square feet under construction and 2.8 million square feet delivered across 18 properties, CommercialEdge data shows. Additionally, Dallas office construction starts picked up last year, as 1.7 million square feet broke ground, marking a 50 percent increase year-over-year.

However, the metro still faces a few challenges. The vacancy rate rose 330 basis points year-over-year as of January, clocking in at 24 percent. Additionally, as loan delinquencies increased, property owners have been more frequently selling their underperforming office buildings at a discount.

Construction activity remains above national average

Dallas’ office construction pipeline at the end of 2024 totaled more than 2.9 million square feet, accounting for 1 percent of the metro’s inventory. That was 20 basis points higher than the national threshold, as well as peer markets such as Houston (0.8 percent) and Atlanta (0.5 percent) but lagged behind Austin (3.7 percent).

When taking into account projects in the planning stages as well, the market’s share jumped to 4.6 percent. Additionally, Dallas’ office construction starts in 2024 amounted to 1.7 million square feet from the 17 projects that broke ground. That represents a more than 50 percent increase year-over-year.

In April, a joint venture between Pacific Elm Properties and KDC obtained $290 million for the construction of Parkside Uptown, a 500,000-square-foot development in Dallas. The developer broke down on the project in 2023 using funds from a $300 million note and expect to deliver it in 2027.

Office deliveries drop year-over-year

Dallas’ office construction activity led to 18 properties coming online in 2024, which totaled more than 2.8 million square feet. That accounted for 0.8 percent of its total stock, slightly above the 0.7 national average. However, that figure was still almost 30 percent lower year-over-year.

Among peer markets, the metro had the largest share of office space delivered. Atlanta and Austin (2.2 million square feet each) were slightly behind, while

Last quarter, Ryan Cos. completed Ryan Tower, a 409,000-square-foot office building in Plano, Texas. The 23-story high-rise, which was already more than 50 percent leased at the time, is part of the $3 billion mixed-use development Legacy West.

Office-to-residential conversions on the rise

Investors remain keen on office-to-residential conversions due to ongoing challenges in the office sector, such as rising vacancy rates. CommercialEdge’s Conversion Feasibility Index, powered by Yardi, assesses the practicality of repurposing buildings based on factors like walkability, age, and floorplate shape.

The CFI score classifies buildings into three tiers, with Tier I being the most suitable for conversion. In the Metroplex, there are 43 office properties totaling 4.8 million square feet in this category and 353 properties spanning 43.1 million square feet in the Tier II category.

At the end of last year, Pacific Elm Properties completed the office-to-residential conversion of 14 stories within Santander Tower, a 50-story downtown building. Despite the building having a lower CFI, the developer repurposed the space into 291 units.

Dallas office prices below the national average

After ranking fourth nationally in terms of sales in our last market update, Dallas saw a decrease in investment volume. The metro registered $1.5 billion in assets trading last year, with the average price per square foot standing at $107, considerably lower than the $174 national average.

However, only gateway markets surpassed the Metroplex, with peer metros such as Phoenix and Atlanta ($1.4 billion each) ending the year with less sales. Manhattan continued to lead nationally with $4.9 billion.

In one of the largest deals of the year, Provident Realty Advisors acquired Lakeside Campus, a two-building office campus totaling 807,354 square feet in Richardson, Texas. Trigild sold the 1991-completed asset that features a 16-story building and a four-story low-rise.

Vacancy rate continues to increase

Dallas’ vacancy rate at the end of the January clocked in at 24 percent, 330 basis points higher year-over-year, and considerably above the 19.7 percent national average. San Francisco (29.3 percent) continued to have the most vacant space, followed by Austin (27.8 percent).

At the end of the year, Merit Energy Co. signed a 104,034-square-foot lease at Nuveen Real Estate’s Two Lincoln Centre in Dallas. The firm will mover from a 127,000-square-foot space that is less than 2 miles from the new location.

The metro’s listing rate as of January was $31.4, a 14.9 percent increase year-over-year. Among peer markets, Austin ($45.8), Atlanta ($32.3) and Charlotte ($35.9) fared better, while Houston ($30.1) trailed behind.

The Metroplex’s coworking inventory grows

The Metroplex’s coworking inventory as of January reached 5.2 million square feet across 284 locations. That accounted for 1.8 percent of the market’s total office stock, 20 basis points under the national average.

Miami (3.8 percent) continued to have the largest share of coworking space nationally. Among peer markets, Dallas was on par with Houston and Austin, while Atlanta (2.2 percent) fared better.

Regus remained the largest coworking space provider in the Metroplex with 598,606 square feet across 35 locations. The company was followed by Lucid Private Offices (414,617 square feet), Caddo (274,500 square feet) and HQ (254,757 square feet).

Last year, Workbox entered the Metroplex’s coworking sector, opening a 50,000-square-foot shared office space location in downtown Dallas, at Asana Partners’ Victory Plaza. WeWork previously occupied the location but failed to renegotiate the leasing terms following its Chapter 11 exit.

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Historically, a visitations rate drop from December to January is standard. Excluding the month’s two holiday weeks featuring Martin Luther King Day and New Year’s Day, the January 2025 rate would have equaled December 2024’s average rate.

Weather also played a factor. New York City’s average daytime temperature was 34 degrees in January 2025, compared to 41 degrees in December and 39 in January 2024. In January 2025, New York City experienced 4.5 inches of snow, compared to 2.3 inches in January 2024.

READ ALSO: C-PACE in NYC: Will the Program Finally Take Off?

Visitation for Class A+ buildings averaged 80 percent, down from 86 percent the previous month but up from 78 percent in January 2024.

Class A/A- buildings averaged 63 percent during January, down from 70 percent during December and slightly above 62 percent in January 2024. Class B/C building visitation slid 4 percent month-over-month but was up 5 percent year-over-year.

Manhattan’s office utilization

According to Avison Young’s latest Office Busyness Index figures, Manhattan office utilization is 79.9 percent of pre-COVID levels. Across the U.S., office buildings are 66.9 percent as busy as in January 2019, ultimately showing that NYC is 13 percent ahead of national figures.

“In a world where hybrid work has become so prevalent, the weather has become a significant factor for office attendance,” Pierre Debbas, Esq., co-founder of Romer Debbas LLP, told Commercial Property Executive.

This winter has been significantly colder this year than last, along with an increase in snowfall which has definitely hurt office attendance, Debbas added.

“[NYC’s] congestion pricing likely also played a role in office attendance as post-pandemic there is an increase of the workforce who prefers to drive in than utilize public transportation, and congestion pricing is only an added burden to an already expensive commute to the city.”

Debbas said Class A continues to outpace the rest of the market, predominantly driven by return-to-office mandates that larger corporations are imposing and the allure of all of the amenities that these companies provide in comparison to smaller and mid-sized businesses, which predominantly rent in Class B buildings.

The hybrid model is here to stay

Despite the headline, comparing office visitations for the past month to a pre-pandemic baseline may not be intuitive, according to Michael Webb, partner at Farrell Fritz P.C.

“Remote, work-from-home and hybrid employment arrangements have fundamentally, and perhaps permanently, changed how many work and live,” he told CPE. “It is unlikely that in-office work during the post-pandemic era will ever rise to pre-pandemic levels.”

However, REBNY’s latest monthly analysis of office visitation data for Manhattan buildings indicates the more significant “flight-to-quality” trend the office sector has experienced post-pandemic and suggests that high-quality office assets in major markets are far from having hit rock bottom, he said. The flight-to-quality trend in office leasing is not necessarily new but is borne out by the Placer.ai data analyzed by REBNY.

As REBNY highlights, Class A+ buildings in Manhattan had an average visitation rate of 80 percent for January. The rate drops 17 percent for Class A/A- office buildings to 63 percent, and it drops yet again for Class B/C office buildings.

“The data highlights that companies continue to seek, use and occupy office space in high-quality buildings that offer modern amenities, proximity to retail, transit or areas of socio-cultural interest, as well as health, wellness and sustainability initiatives and packages,” Webb said. “The REBNY analysis highlights the growing disparity within the market between full-service, high-end spaces and lower-quality properties.”

Premium office buildings also attract top dollar financing as a result. Earlier this year, Ivanhoé Cambridge, the real estate group of CDPQ, refinanced its 42-story trophy office tower at 3 Bryant Park in Midtown Manhattan, to the tune of $1.1 billion. JLL’s Capital Markets group arranged the funding.

Strict mandates can hurt office dynamics

Earlier this year, Amazon, Disney, JP Morgan, Starbucks and X summoned workers back to the office full or part-time, Robert Martinek, director at EisnerAmper, shared.

“However, it has been reported that companies that have enacted strict return-to-office requirements have had to deal with losing talent, as some top performers have quit,” he told CPE.

Some feel strict mandates can hurt office dynamics and reduce employee satisfaction, Martinek added. Except for government employees, most companies have adopted a flexible work arrangement. Remote workers have been home since the pandemic and have gotten used to working from a home office.

Supporters indicate that ‘work from home’ helps with family duties, Martinek observed. Additionally, there is no evidence that work-from-home employees are less effective than their counterparts.

“Many companies are downsizing their space but not removing it completely. The ‘two to three days in the office’ works best for companies and employees. The hybrid model is here to stay!”

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Newmark has signed a 15-year renewal and lease expansion at 125 Park Ave. in Manhattan, growing its footprint at the building to 184,239 square feet. The tenant was represented in-house by Newmark’s Jason Perla, Brian Waterman, David Waterman and Matthew Schreiner. 

Newmark has been a constant presence at 125 Park since the mid-1990s, when it committed to 47,000 square feet, according to Crain’s New York. Over the years, the firm has expanded its footprint; in 2014, Newmark occupied more than 133,000 square feet at the 654,800-square-foot property, Bisnow reported.

The office tower is now more than 99 percent leased, according to landlord SL Green. The company is currently finalizing the design of a new lobby and restoration of the building’s entrance to its original design.

READ ALSO: Net Effective Office Costs Edge Up

SL Green has owned the property since 2010, when the company acquired it for $330 million from Shorenstein, which had bought it in 2004 for $225 million. Completed as the Pershing Square Building in 1923, the office tower is a designated New York City landmark for its “significant contribution to the variety and richness of Midtown East.”

Located across from Grand Central Terminal, the 26-story building features floorplates ranging from 9,556 to 26,256 square feet, as well as 17,000 square feet of retail. Tenants at the LEED Gold-certified property also include TD Bank, Pandora Music and Canon U.S.A., according to CommercialEdge information.

SL Green, Manhattan’s largest office landlord, held interests in 54 buildings totaling 30.6 million square feet at the end of 2024. So far in 2025, the REIT has signed office leases totaling 455,008 square feet, with a current pipeline of about 975,000 square feet. In one of this year’s deals, IBM expanded its footprint at One Madison Avenue.

Manhattan office market sees some strength

Office leasing has picked up recently in Manhattan, a market that had been hit fairly hard by pandemic and post-pandemic realities. In 2024, according to Newmark data, 38.1 million square feet were absorbed in the borough, up from 30 million square feet in 2023, and the most since before 2020.

New office space deliveries, which had spiked to 5.7 million square feet in 2023—the most since 2019’s total of 7.7 million square feet—shrank to practically nothing in 2024, Newmark noted. Only about 100,000 square feet came online last year in Manhattan.

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Highwoods Properties Inc. has agreed to acquire Advance Auto Parts Tower, a 20-story, Class A+ office asset in Raleigh, N.C. The Triangle Business Journal identified the owner as Lionstone Investments, which developed the building in partnership with Kane Realty Corp., the property’s manager.

Highwoods plans to fund the acquisition of Advance Auto Parts Tower “on roughly a leverage-neutral basis” using proceeds from the recent $145 million sale of three office buildings in Tampa, Fla.

Subject to customary closing conditions, the deal is scheduled to close in the next 30 days. The buyer will be depositing $20 million in earnest money.

A Highwoods spokesperson declined to provide additional information on the pending transaction.

A Class A+ office building

The 346,000-square-foot, LEED Gold–certified tower came online in 2020. It features 11 floors of office space atop eight levels of parking, as well as roughly 8,200 square feet of retail. The property was fully leased at the end of 2024, with a weighted average lease term of 8.2 years.

Advance Auto Parts Tower is in the North Hills submarket, with a street address of 4200 Six Forks Road or 4000 Front at North Hills Street. The building is immediately adjacent to CAPTRUST Tower, a 300,000-square-foot Class A+ office property that is also owned by Highwoods.

At the end of 2024, the REIT’s portfolio encompassed 27.2 million square feet across several U.S. markets, while its development pipeline totaled 1.6 million square feet. One of the underway projects is a 642,000-square-foot mixed-use development in Uptown Dallas that centers on a 26-story office tower.

Still recovering

The Raleigh-Durham office market seems to be largely in recovery mode right now, based on a fourth-quarter report from Avison Young.

For example, the Six Forks Road submarket has 1 million square feet of total availability, against an inventory of 4.8 million square feet. This is at least better than the ratio for the two metros overall, which is 14 million square feet available, compared with an inventory of 59 million.

A remarkable twist is that Class C space is seeing the lowest availability of all product classes, at 5.4 percent.

Still, Avison Young reports, trophy properties remain in a class by themselves: “Trophy property rates continue to be significantly higher than Class A space. Despite availability for trophy properties being high, at 44.5 percent, asking rental rates are unlikely to come down in 2025 as owners are still hoping to make their office investments work.”

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Golub & Co. has signed a 12,277-square-foot lease at RSM Plaza, a 415,824-square-foot office complex in Minneapolis’ central business district.

Transwestern Real Estate Services worked on behalf of the landlord, while IAG Commercial Real Estate represented the tenant, Meyer Borgman Johnson.

The structural design practice will relocate its corporate headquarters to the 20-story property, with a move-in scheduled for June this year.

Located at 801 Nicollet Mall, RSM Plaza was developed in phases between 1968 and 1971. The property consists of two office buildings known as the West and East Towers.

Close to multiple bus stops as well as to interstates 394 and 94, RMS Plaza is 12 miles from Saint Paul, Minn., and within 14 miles of Minneapolis-Saint Paul International Airport.

READ ALSO: What’s Defining Office in 2025?

Meyer Borgman Johnson will move from the nearby 510 Marquette Ave. S. to the property’s West Tower, fully occupying the 20th floor. Golub & Co. owns the duo since 2015, when it picked up the asset for $78.4 million, according to CommercialEdge. The ownership completed a $10 million improvement program in 2018 that added multiple upgrades at the property, such as a renovated lobby and the addition of conference rooms and meeting spaces.

RSM Plaza includes floorplates between 12,300 and 29,000 square feet, an on-site fitness center, bike storage and on-site parking, as well as 25,000 square feet of first and second-floor retail space. Other tenants include R.S. Peterson Sales Inc., Groundswell, Community Reinvestment Fund USA and Bioworld Merchandising, CommercialEdge shows.

Transwestern’s team of Vice President Trinette Wacker and Principal Broker Reed Christianson brokered the deal on behalf of the landlord. President Jeffrey LaFavre and Advisor Zach Synstegaard with IAG Commercial Real Estate represented the tenant.

Twin Cities ends 2024 with affordable rents and low vacancy

According to a recent CommercialEdge report, office markets in the Midwest had the most affordable rates in 2024. Twin Cities posted the second-lowest average asking rent at $26.25 per square foot, below the national average of $33.11 per square foot. Detroit was the least expensive among the top 25 U.S. office markets, with rents averaging $21.46 per square foot.

With a rate of 16.2 percent as of December, the Twin Cities recorded the third-lowest office vacancy rate in the nation, representing a 160-basis-point year-over-year decline.

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Whiting-Turner’s will build its corporate headquarters with the help of architect Gensler as part of a 50-year ground lease agreement, which will be a cornerstone of long-term collaboration between the two organizations.

The 150,000-square-foot office building is expected to be completed in 2028. It will include a safety-focused training center and connect Whiting-Turner and Goucher College to the surrounding Towson area, 8 miles north of Baltimore.

The facility will also introduce young adults to career opportunities in construction and design.

For the past 51 years, Whiting-Turner’s headquarters have been the Hampton Plaza Office Building on East Joppa Road in Towson.

Six months earlier, Goucher College and Edenwald Senior Living announced plans for Maryland’s first university retirement community.

It will combine cultural and educational activities through Goucher with the amenities and services of a Life Plan Community to foster lifelong learning and connection.

Whiting-Turner has been active in supporting the Baltimore area. It recently announced that it will partner with the Boys and Girls Clubs of Metropolitan Baltimore and the Baltimore Ravens to create a Hilton Recreation Center that will serve 2,000 youth annually.

In December, Whiting-Turner was part of a group that began construction for VanTrust on the 526,119-square-foot Building C at the 2.4 million-square-foot Platte International Commerce Center development in Kansas City.

Delivery is expected in July for the facility, which might be expanded to 1.1 million square feet.

The post Whiting-Turner Brings Corporate HQ to Goucher College appeared first on Commercial Property Executive.

A spokesperson for Tyler Duncan Real Estate identified the tenant as JLG Industries Inc., a manufacturer of high-level access equipment, such as boom lifts and telescopic handlers, headquartered in McConnellsburg, Pa.

Matan did not respond to Commercial Property Executive’s request for additional information, but its announcement stated that 280,000 square feet of space remain available at 8484 Progress Drive and the adjoining 8480 Progress Drive. Both buildings feature high-bay space and reportedly are suitable for a variety of office, R&D, and other technology-focused users.  

The 177-acre R&D park is immediately south of the Monocacy River and already home to Charles River Laboratories and the National Cancer Institute’s 332,000-square-foot Frederick National Laboratory Facility. Matan’s vision for the park encompasses additional facilities for the federal government, educational institutions, an incubator and private-sector companies. The park’s green space includes water features, multiple gazebos and more than 5 miles of walking trails.

READ ALSO: The Most Active Life Science Markets in the US

Matan reported that Riverside Research Park is approved and ready to build with 1.4 million square feet of planned lab, manufacturing and office space.

Matan Cos. was represented in-house by Leasing Director Brad Benna, and the tenant was represented by Tim Shanklin of Tyler Duncan Real Estate.

Public and private entities expand

The life science sector in Maryland’s I-270 corridor also known as the BioHealth Capital Region totals nearly 12.5 million square feet of lab space, driven in large part proximity to such federal agencies as the National Institutes of Health and the Food and Drug Administration, according to a brand-new report from Cushman & Wakefield.

On the private-sector side, AstraZeneca is a big player, having expanded its presence by almost 300,000 square feet last year and with plans for further investments.

Although overall vacancy rose to 14.0 percent, Cushman & Wakefield reports that “suburban Maryland’s supply is not as overbuilt as other top markets, given the overall inventory and size.”

Rents for R&D space in Montgomery County average between $40 and $45 per square foot, triple net. a level that Cushman & Wakefield anticipates will be stable as current space is absorbed. Fortunately, no new space is in the pipeline.

Last September, a joint venture of Matan Co., Rockefeller Group, Mitsubishi Estate New York, Chuo Nittochi and Taisei USA LLC began construction on the first phase of Port 460 Logistics Center in Suffolk, Va., about 20 miles from the Port of Virginia. When it delivers, the campus will total about 5 million square feet.

The post Matan Cos. Lands New Tenant for DC-Area Project appeared first on Commercial Property Executive.

The Trepp CMBS Special Servicing Rate pulled back 2 basis points to 9.87 percent in January 2025. This was the first decline in the monthly rate since December 2023.

The main driver of the rate’s decrease was the increased overall balance of all CMBS loans outstanding. Compared to last month, the balance of loans in special servicing rose by $843.0 million, but the balance of all outstanding CMBS loans also increased by $9.5 billion.

Broken down by property type, two sectors experienced substantial changes to their individual rate. The retail rate was down most significantly, falling just shy of 100 basis points to 10.68 percent. The sector with the biggest increase in special servicing rate was mixed use, which rose 98 basis points to 12.71 percent. This is the largest jump in the mixed use rate since March 2013. Two other sectors that sustained material change were multifamily and office. The multifamily rate fell 31 basis points to 8.42 percent while the office rate rose 34 basis points to 15.11 percent. This is the first time the office rate has cleared 15 percent since Trepp began publishing these rates in the year 2000.

—Posted on February 28, 2025

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The average sale price fell 11 percent year-over-year to $174 per square foot, following a steeper 24 percent drop in 2023. Since 2019, office values have plunged 37 percent.

High-end properties and those in central business districts (CBDs) saw the sharpest declines, with A and A+ buildings losing 22 percent of their value in 2024, while B-rated properties slipped just 3 percent. CBD office prices plummeted 28 percent, while suburban and urban submarket properties fell 15 and 24 percent, respectively.

Distressed sales surged, with nearly 600 buildings—over a third of all office transactions—selling at a discount. More than a third traded for less than half their previous price. As the sector evolves, CommercialEdge expects that the gap between resilient and struggling assets to widen.

READ ALSO: Net Effective Office Costs Edge Up

The national office vacancy rate reached 19.7 percent at the end of January, up 180 basis points year-over-year but down 10 basis points from the previous month. Vacancy rates have steadily risen in recent years as remote and hybrid work remain widespread. Some of the highest vacancies were recorded in San Francisco (29.3 percent), Austin (27.8 percent), the Bay Area (26.3 percent) and San Diego (20.6 percent).

In January, national full-service equivalent listing rates averaged $33.38 per square foot, marking a 27-cent increase from the prior month and a 5.8 percent rise year-over-year. According to CommercialEdge, Manhattan posted the highest listing rate at $68.24 square foot, followed by Miami at $56.91 per square foot.

Office-using employment dipped in January, shedding 2,000 jobs, yet still reflecting a modest 40-basis-point annual growth, bringing the total to 35 million. The professional and business services sector lost 11,000 jobs, while financial activities and information sectors saw gains of 7,000 and 2,000 jobs, respectively.

Over the past year, office employment contracted by 0.1 percent to 34.7 million, a net loss of 35,000 jobs. Professional and business services saw the steepest drop, down 69,000 positions, followed by a 21,000-job decline in the information sector. Financial services, however, added 55,000 jobs.

Office development slows as sales struggle to rebound

The office construction pipeline featured 50.7 million square feet in January—equivalent to just 0.7 percent of total inventory, according to CommercialEdge data. In 2024, 44.1 million square feet of office space was delivered nationwide, marking the fourth consecutive year of annual declines. Meanwhile, new construction remained sluggish, with just 9.1 million square feet breaking ground over the past year.

Boston led the nation with 7.3 million square feet of office space under construction, accounting for 2.8 percent of its total inventory. Austin followed with 3.6 million square feet (3.7 percent of stock), while San Francisco had 3.5 million square feet underway (2.1 percent). San Diego reported 3.1 million square feet in development (3.2 percent), and Dallas rounded out the top five with 2.8 million square feet (1.0 percent of its inventory).

Meanwhile, office sales totaled $41 billion in 2024, with office properties trading at an average of $174 per square foot. Year-over-year, sales volume increased by $3.2 billion, while prices declined by $22. Since 2019, annual sales volume has dropped by $82 billion, with prices falling by $103.

Read the full CommercialEdge office report.

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Put another way, even that conservative estimate of the economic damage adds up to about 4 percent of California’s GDP.

That’s the beginning of the context for Rising from the Ashes: Assessments on the Impacts to CRE Post the LA Wildfires, a new report from JLL Research.

As day after day of news video footage from the fire zones showed, the heaviest property damage was to single-family residences, nearly 11,000 of which were destroyed, representing more than half of the SFR stock in the two fire zones (Palisades and Eaton). In addition, more than 300 multi-housing structures were destroyed.

On one hand, the 11,000-odd housing units destroyed or significantly damaged represent just 0.4 percent of the market’s housing stock, yet the estimated 24,000 families displaced by the fires have to live somewhere.

READ ALSO: 5 Overlooked Insurance Gaps That Could Hit Your Bottom Line

And JLL reminds us that Southern California was already a long-term supply-constrained market. As higher-income families relocate to single-family rentals, others will spill over into the multifamily sector. “Already the exacerbation of Los Angeles’ multi-housing supply shortage will result in elevated rent growth in the medium term,” according to the report.

Impact to retail, office, industrial  

Though less publicized, the region’s retail, office and industrial commercial real estate sectors were also hit. About 200 commercial buildings, predominantly retail properties and food-and-beverage establishments, were destroyed. They represent, JLL stated, nearly half of the retail establishments and about one-third of the total retail space in the fire zones.

In the near term, home centers and hardware retailers could benefit. “Longer term,” JLL added, “mixed-use developments may be a way to address both the housing shortage exacerbated by the fire as well as replace the lost retail space, which has not been growing for a long time.”

The fires’ effects on office space are expected to be indirect, potentially by displacing office workers, especially in the professional and technology services sector and the media and entertainment sector.

The impacts on industrial real estate could be more direct, with rebuilding efforts boosting the demand for warehouse space and IOS properties.

Additionally, JLL reported, home appliances, furnishing and day-to-day necessities must be replaced, further bolstering the need for warehousing. “This will help lower industrial vacancies in and around the affected areas, particularly in the San Fernando Valley and San Gabriel Valley markets where total vacancy currently stands at 4.2 percent and 5.8 percent, respectively.”

Given the efforts by the state government to streamline rebuilding, JLL noted, the real challenges lie in physical construction. “Due to significant demand, labor and materials will be expensive, further complicating rebuilding efforts.”

Finally, those generally higher replacement costs for commercial real estate have the potential to make existing buildings more attractive for investors.

The post How Rebuilding From LA’s Wildfires Is Impacting CRE appeared first on Commercial Property Executive.

New construction starts in 2024 totaled only 9.8 million square feet—a steep drop from the 83 million square feet recorded in 2019, while 54.7 million square feet of space was under development at the end of December 2024.

According to CommercialEdge data, the top ten metros on this list included 29.3 million square feet of completed office space. This accounted for 67.8 percent of the total square footage that came online last year in the nation. Here are the top markets for office deliveries in the country in 2024:

1. Boston

In 2024, developers in Boston completed 6.4 million square feet of office space across 22 properties. This marked a 21.5 percent increase from 2023, when the metro saw nearly 5.3 million square feet in completed projects across 13 properties.

Significant projects that came online last year in the life sciences hub include 10 Prospect St., a 205,000-square-foot building in Somerville, Mass., deisgned by SGA. US2, the partnership of Magellan Development Group, RAS Development, Cypress Equity Investments and Affinius Capital, completed the LEED-Gold certified, life science property in early 2024.

Meanwhile, construction starts in the past year totaled 1.1 million square feet across four properties—a 64.1 percent decrease when compared to the previous year’s figures, when 3.1 million square feet across 10 properties broke ground. As of December, Boston had 8.7 million square feet under construction across 26 properties, ending last year as the market with the largest pipeline. The figure represented 3.4 percent of existing stock, way above the national average of 0.8 percent.

Significant projects currently underway in the metro are generally life sciences-driven. One of them is Tishman Speyer’s Harvard Enterprise Research Campus in Allston, Mass., that had its first phase, a 440,000-square-foot lab component, top out in August 2024. Meanwhile, one of the metro’s most active developers, BioMed Realty, topped out 585 Kendall, a life science project totaling 637,000 square feet in Cambridge, Mass.

2. Seattle

Another life sciences sector-driven market, Seattle recorded 4 million square feet of delivered space across 11 properties in 2024. The figure marks a 36.3 percent increase from the 2.9 million square feet that came online in 2023.

Notable completions of last year include Skanska’s The Eight, a 729,000-square-foot office building in Bellevue, Wash. The 26-story property was more than 80 percent preleased prior to its delivery and marked Bellevue’s first speculative office project to be developed in the last six years.

In terms of construction starts, The Emerald City saw only one project break ground in 2024, totaling 80,000 square feet. When compared to the previous year, when 691,700 square feet across 22 properties commenced construction, the metro saw a drastic 88.4 percent drop in construction starts, driven by the year’s economic challenges. Despite this decrease, at the end of last year there were 10 properties under development in Seattle, totaling approximately 5.2 million square feet.

3. Dallas-Fort Worth

The third metro on our list is The Metroplex, with 2.8 million square feet across 19 properties that came online in 2024—marking a 29.4 percent decrease from the year before last, when developers completed 4 million square feet across 26 properties.

Construction starts in Dallas also marked an impressive drop: the metro recorded only 884,365 square feet across 10 properties that broke ground in 2024, representing a 73.1 percent decrease from 2023. For context, the metro had nearly 3.3 million square feet across 22 properties that started construction at the time.

Meanwhile, the metro’s under construction pipeline included 4.1 million square feet of space across 24 properties as of December. One of the largest projects underway is 23Springs, a 642,000-square-foot mixed-use project in Uptown Dallas. The project topped out in October last year and includes a 26-story office tower and two restaurant buildings.

4. San Diego

Our list of top markets for office deliveries continues with San Diego, that had 2.7 million square feet across 19 office properties delivered in 2024. When compared to the year before last's data, when developers completed only five properties totaling 748,807 square feet, San Diego’s last year inventory marked an impressive surge in completions, with a 266.5 percent increase.

However, on the construction starts front the numbers were reversed: 2024 recorded only 310,956 square feet across four properties that broke ground—representing an 85.8 percent decline from the 2.2 million square feet that started construction in 2023.

As of December, San Diego’s pipeline included 3.6 million square feet across 21 properties. One of the largest projects under development is a life science building totaling 426,927 square feet in the metro’s Torrey Pines submarket. Developed by Alexandria Real Estate Equities, the project at 4135 Campus Point Court is already fully preleased by Bristol-Myers Squibb Co. The development is within the company's 2 million-square-foot Alexandria Point campus.

5. San Francisco

Another top market for office deliveries that's driven by the life sciences sector, San Francisco, saw 2.7 million square feet of completed space in 2024, across 13 properties. A notable delivered project was the 327,000-square-foot life science building at 651 Gateway Blvd. BXP completed the 16-story project in March. The amount of last year’s completions was slightly larger when looking at the previous year: 2023 had recorded 2.2 million square feet of new space across 15 properties. This marks a 22.5 percent increase in 2024’s projects that came online.

In contrast, 2024 construction starts included only three properties totaling 316,000 square feet—marking an 89.7 percent drop when compared to the nearly 3.1 million square feet that broke ground in 2023. However, San Francisco’s completions may pick up in 2025: the metro ended last year with 4.5 million square feet across 20 projects under construction.

6. Washington, D.C.

The nation’s capital had 2.4 million square feet of completed office space across 11 properties, making it number six on our list of top markets for office deliveries. This reflects a 50 percent decline from 2023, when 14 projects reached completion, contributing with 4.9 million square feet.

D.C.’s developers opted for Class A and A+ assets, while one of the largest projects to reach completion in 2024 included 3901 Fairfax Drive, a 201,000-square-foot building in Arlington, Va., developed by Skanska. Construction activity remained sluggish: the capital city ended 2024 with one of the smallest pipelines across gateway markets: only 1.5 million square feet across seven projects were underway.

7. Austin

Austin’s 2024 deliveries mirrored the previous year’s, remaining on the same seventh place on our list. Developers completed 2.2 million square feet across 22 properties—representing a 21.1 percent drop when compared to 2023’s data, when 39 projects totaling 2.9 million square feet were added to its inventory.

However, developers broke ground on slightly more projects in 2024 than the year before last: Austin had 1.4 million square feet in construction starts that marked a 15.6 percent uptick compared with the 1.2 million square feet that broke ground in 2023.

The metro ended 2024 with one of the most active pipelines in the nation in terms of actual square footage: 33 projects were underway, totaling 4.2 million square feet.

8. Bay Area

The Bay Area added 2.1 million square feet of completed space across nine properties in 2024. This marked a significant decrease of 48.6 percent from the 4.2 million square feet completed in 2023.

A recent completion is The Landing’s first building, a 300,000-square-foot office property in Burlingame, Calif. The property is part of King Street Properties’ two-building life science campus on the San Francisco Peninsula. The Bay Area’s under development pipeline included 3.6 million square feet at the end of 2024.

Meanwhile, construction starts on the metro included only two projects totaling 202,631—marking a significant drop of 86.2 percent when compared to the 1.5 million square feet that broke ground in 2023.

9. Atlanta

Deliveries included 12 office projects totaling 2.1 million square feet, placing Atlanta among the lowest-performing markets in terms of added inventory. This marks a 27.6 percent increase from 2023, when 1.7 million square feet came online.

Among large completions was Science Square Labs, a 368,258-square-foot office building. The property is the first phase of Science Square, a life science district expected to include 1.8 million square feet of mixed-use space.

Atlanta also placed on the ninth spot on our list in terms of under-construction space, ending 2024 with 1.3 million square feet underway. Meanwhile, only one, 200,000-square-foot property started construction last year, representing a massive drop of 82.9 percent from 2023 construction starts, that included nearly 1.2 million square feet of space.

10. Raleigh-Durham

Raleigh-Durham landed on the last spot on our list of top markets for office deliveries, with completions totaling 1.7 million square feet across 14 properties. That marks a 29.4 percent increase from the previous year, when 10 properties totaling 1.3 million square feet came online.

Developers broke ground on four properties totaling 517,165 square feet, slightly below the previous year, when construction starts included 650,879 square feet—the difference represents a 20.5 percent decrease. Meanwhile, Raleigh-Durham ended last year with 1 million square feet of space underway across seven properties.

The post Top 10 Markets for Office Deliveries in 2024 appeared first on Commercial Property Executive.

The joint venture of Hines and Ivanhoé Cambridge has received $450 million in refinancing for Texas Tower, a 1.2 million-square-foot high-rise in Houston. Wells Fargo and Morgan Stanley provided the loan package, in a deal arranged by Newmark on behalf of the owners.

The 47-story building came online in 2021 with the aid of a $317.6 million construction loan provided by New York Life Insurance Co. back in 2018, CommercialEdge shows. At that time, Texas Tower was the largest office project under construction in Houston. The property later became subject to a four-year $267 million note, originated by Ivanhoé Cambridge in 2023, according to the same source.

READ ALSO: Top 5 LEED Platinum-Certified Buildings in the US

This loan marks the first time in two years when a multi-tenant office building outside New York City has secured financing in the CMBS single-asset, single-borrower market, stated Newmark Co-President Jonathan Firestone in prepared remarks.

A high-rise in downtown Houston

Located at 845 Texas Ave., Texas Tower is in Houston’s central business district and has access to interstates 45 and 10. The George Bush Intercontinental Airport is some 20 miles away.

The building was 95.0 percent leased at the time of the deal and serves as Hines’ global headquarters. Its tenant roster also includes Vinson & Elkins, Morgan Stanley, Cheniere Energy Inc. and Clifford Chance, among others.

The LEED Platinum-certified Texas Tower features floorplates ranging between 30,438 and 31,255 square feet, 24 passenger elevators and 1,500 car parking spaces. Amenities include a conference center, rooftop garden and fitness center.

Newmark Co-Heads of Global Debt & Structured Finance Jordan Roeschlaub and Jonathan Firestone, Vice Chairmen Clint Frease and Blake Thompson, Managing Director Travis Bailey, Director Peter Mavredakis and Associate Director Tim Polglase secured the financing package.

Newmark landed the number one position in Commercial Property Executive‘s 2025 top commercial mortgage brokers. The firm provided loans totaling more than $48.4 billion during the 12 months ending in September 2024 and increased its originations volume by 79.6 percent year-over-year.

The post Hines, Ivanhoé Land $450M Refi for Houston Trophy Tower appeared first on Commercial Property Executive.

Insurance brokerage company Lockton has signed a 52,961-square-foot office lease with Granite Properties and Highwoods Properties at Granite Park 6, in Plano, Texas. The company’s corporate relocation is scheduled for 2026.

Cushman & Wakefield, together with Stream Realty Partners, worked on behalf of the tenant. An in-house team represented the ownership in the lease deal.  

Lockton plans to move 9 miles south from its current office location at Dallas Parkway where it leased 18,000 square feet. The company will occupy two floors at Granite’s 422,109-square-foot building and will join Atlantic Aviation and Stonebriar Commercial Finance in the property’s tenant roster, CommercialEdge shows.

Lockton’s current deal quickly follows the company’s signing of a 100,000-square-foot lease earlier this month at the 15-story Victory Commons One, Dallas Business Journal reported.

As of February, the office vacancy rate in Dallas clocked in at 24.0 percent, up 330 basis points over a 12-month period, according to a recent CommercialEdge report, and was higher than the 19.7 percent national average rate.

A newly LEED Silver-certified building

Located at 5525 Granite Parkway, the property is just off Texas State Highway 121 and 25 miles north of downtown Dallas. The office building is also some 20 miles northeast of Dallas-Fort Worth International Airport.

Completed in 2023, the 19-story tower is part of the 90-acre mixed-use Granite Park. Amenities at the LEED Silver-certified asset include a 150-seat lecture hall, three conference centers, a terrace connecting to a fitness studio and indoor customer lounge on the sixth floor, as well as 35,000 square feet of ready suites ranging from 1,500 to 5,500 square feet. 

Cushman & Wakefield Executive Managing Director Mike Mayer and Managing Director Josh Goldsmith, together with Stream Realty Partners Managing Director Dan Harris and Executive Vice Chairman Randy Cooper worked on behalf of Lockton.

Granite Park 6 in-house leasing team led by Directors Robert Jimenez and Burson Holman, and Leasing Manager Elizabeth Fortado represented the ownership.

The post Lockton Signs 53 KSF Office Lease at Dallas Tower appeared first on Commercial Property Executive.

To have your commercial real estate transaction featured, submit details to Agota Felhazi at agota.felhazi@cpe-mhn.com.

Read the March 2025 issue of CPE.

The post Transactions: March 2025 appeared first on Commercial Property Executive.

Suburban office properties and parks are generally weathering the office sector’s heightened vacancy rates, slumping property valuations and lagging sales volumes reasonably well in comparison to most of their downtown counterparts.

The average suburban office vacancy rate was 17.1 percent in the fourth quarter of 2024, 50 basis points below the national average of 17.6 percent, according to Colliers’ quarterly office market report. CBD vacancy stood at 100 basis points above the national average. Class A suburban office spaces also saw significant rent growth, up 1.4 percent year-over-year on average, as CBD rents moved 2.4 percent in the opposite direction.

Employee demands for shorter commutes, the downsizing of office space and corporate relocations are among the key drivers of suburban office’s comparative resilience. In the post-pandemic period, suburban office investment is a mix of bargain-hunting with renovation and space activation in mind, along with possible adaptive reuse. Ground-up development, on the other hand, bears little resemblance to the corporate office parks of the 1980s and 1990s, and is taking a page out of the mixed-use playbook.

New preferences

To become future-proof, an investment and development strategy for suburban office requires more attention to changing work habits, employee preferences and lease terms.

During the suburban office markets’ last heyday in the 1990s and early 2000s, a history of high occupancy by credit tenants was enough to justify purchasing properties down to the B and C classes. Now, a flight to newer, smaller offices with appealing amenities has permeated suburbia.

CBRE research found that the average size of office leases decreased 27 percent during the first half of 2024 compared to 2018 and 2019. Amenity-driven “prime” buildings generated terms that averaged 21 months longer than Class B and C buildings.

The tenant mix is evolving, as well. Today’s new suburban tenants are likely to be such companies as medical practices, professional services companies and law firms, rather than the back offices, call centers and corporate campuses that were more typical of suburban denizens in earlier decades. The new wave of tenants often seeks to consolidate their workforces in locations that are easier to access on a more consistent basis than downtown.

“If you look at suburbia, you look at the carcasses of former headquarters,” said Mark Toro, CEO of Toro Development Co., which is developing a $560 million mixed-use property on the former site of the State Farm campus in Johns Creek, Ga., a suburb northeast of Atlanta.

Also influencing the picture are suburban tenants that are shrinking their footprints and opting for better-quality, higher-priced space. For example, a tenant might move from 100,000 square feet in a Class B building to a Class A space less than one-third that size.

“Companies willing to invest and wanting their workforce to be in person are looking at high-quality space,” commented Jeff Koukol, an executive director at Glenstar. Such trends are impacting investment strategies.

We are always looking for a property with another component to it, one where we may be able to develop some ancillary spaces. Our eye is always on the vacant land that may come along with it.

– Paul Gaines, Chief Asset Officer, Accesso Partners

Accesso Partners, which owns and operates 52 suburban office properties in the South and Midwest, would once buy older, high-quality Class B assets that offered an attractive price point for tenants. “We felt that there was always going to be a market for that,” said Paul Gaines, the firm’s chief asset officer. But, he added, “there are assets that we may have (once) looked at that we have taken off the list because of age.”

Assets offered at a discount provide low-hanging fruit and give tenants an opportunity to rent space in locations they’d otherwise be priced out of. “Our main focus today is on acquiring suburban offices at a discount to what we think it would cost to rebuild, and (using) the lower basis as a means to re-lease to tenants that may not have been able to afford higher market rents,” noted Chris Loeffler, CEO of Caliber.

Proximity to retail and dining offerings, alongside amenities and the potential for future additions, is a big priority for avoiding the pitfalls that caused many suburban office properties to become abandoned during the pandemic. A shorter commute may not be enough to compensate for the need to make a 15-minute drive for the nearest cup of coffee outside the building’s cafeteria.

Future-proof investments

Also at the top of the list for smart suburban office strategies: redevelopment potential, partly due to the age of much of the nation’s existing stock. That can mean anything from a vacant site that could be used for new amenities to a new ground-up project.

In October 2024, Rubenstein Partners completed the $36 million recapitalization of Parkwood Crossing, a 1.2 million-square-foot office park located in Carmel, Ind., a suburb north of Indianapolis. The project’s centerpiece is the Parkwood Amenity and Recreation Center, a 14,000-square-foot facility with a dining hall, a fitness center, conference spaces, a lounge and a deck. The property also offers outdoor recreation areas, including pickleball courts. So far, Rubenstein has invested in refreshing the building systems, entries and lobbies. Future additions may include restaurants and multipurpose green spaces.

Our main focus today is on acquiring suburban offices at a discount to what we think it would cost to rebuild.

– Chris Loeffler, CEO, Caliber

“The types of things that we look to buy are the things that have already been attractive to larger credit tenants, or we think (that) if we get in there and invest the capital and make the changes that we expect to make, we will draw them,” shared Eric Schiela, Rubenstein’s co-founder & COO.

Like densely populated urban areas with housing shortages, suburban neighborhoods offer options for office-to-multifamily makeovers. That also goes for suburb-like neighborhoods within big cities. In September 2024, Caliber purchased Canyon Corporate Center, a 311,706-square-foot Phoenix office property that the firm plans to convert to residential.

“(For acquisitions), we’re looking for those (buildings) that are long and skinny, where we can build a hallway in the middle to convert to residential, or those that have a lot of excess parking that we can use for other developments to support other uses,” said Loeffler.

Besides altering a property’s surroundings, making space more conducive to employee preferences for collaboration and socialization is another common thread for suburban office properties. In October 2024, Glenstar and a private investor completed a $16 million recapitalization of Presidents Plaza, a two-building, 831,442-square-foot property northwest of downtown Chicago.

The funds went to the construction of spec suites and common areas. “Where tenants are downsizing their space, they still need the facility to bring a larger group of employees back to congregate and to have larger meetings,” noted Koukol.

Read the March 2025 issue of CPE.

The post Suburban Surge in the Office Market appeared first on Commercial Property Executive.

The Trepp CMBS Delinquency retreated slightly in January 2025, with the overall delinquency rate decreasing 1 basis point to 6.56 percent.

This pullback follows six straight months of increases to the overall delinquency rate, during which the rate rose almost 120 basis points. The decrease in the overall rate was driven by the office sector, with the office rate falling 78 basis points to 10.23 percent. This was some welcome relief for the sector, which had reached an all time high to end last year.

READ ALSO: Best Capital Stack Strategies for 2025

Outside of the office sector, the remaining four of five major property types all experienced increases to their respective delinquency rates. These increases were relatively tame however, with only the industrial rate increasing more than 10 basis points. On the loan level, the largest loan to become newly delinquent was a single-asset single-borrow office loan worth $525 million.

If we included loans that are beyond their maturity date but current on interest, the delinquency rate would be 8.29 percent, down 29 basis points from December. The percentage of loans in the 30 days delinquent bucket is 0.39 percent, up 13 basis points for the month.

Our numbers assume defeased loans are still part of the denominator unless otherwise specified.

—Posted on February 27, 2025

The post 2025 CMBS Delinquency Rates appeared first on Commercial Property Executive.

Shorenstein Investment Advisers has teamed up with Tritower Financial Group to acquire The Xchange, a 480,000-square-foot office and R&D complex in Bedford, Mass., for $96 million. The new ownership also secured $50 million in acquisition financing provided by Barings, according to CommercialEdge.

The seller was Jumbo Capital Management, which previously purchased the office campus for $107.8 million in 2018, according to the same source.

The XChange is 99 percent occupied by a mix of tenants including iRobot, Nyobolt, Entegris and Quanterix. JLL’s Senior Managing Director Christopher Lawrence and Executive Managing Director Matt Daniels have been tapped to lease the remaining space at the property.

An eight-building innovation campus, The XChange is at 8 Crosby Drive, within Boston’s Merrimack Valley West submarket. Situated on 22 acres, the complex provides easy access to Massachusetts Route 3 and to Interstate 95, while being 21 miles from downtown Boston and Boston Logan International Airport.

Developed in 1968 and completely upgraded in 2017, The XChange buildings range between two and three stories. The properties feature loading docks, passenger elevators and 760 vehicle parking spots.

The amenity package contains a fitness center with a yoga studio, a modern café and outdoor seating spaces. The partnership plans to further enhance the property and add 70,000 square feet of R&D space.

Boston’s office investment activity

Since the start of the year, Boston’s office transaction volume placed it among the top-performing markets in the U.S., according to a recent CommercialEdge report. The metro recorded $2.5 billion in sales and ranked fourth, with office assets trading at an average sale price of $259 per square foot as of January. The value is the seventh-highest among the top 25 markets covered by CommercialEdge.

In late 2024, Norges Bank Investment Management purchased interests in two office properties in the area, as part of a larger deal. The bank paid $976.8 million for a 50.1 percent stake in a 3.7 million-square-foot office portfolio that included assets in Boston, San Francisco and Washington, D.C.

The post Shorenstein JV Pays $96M for Boston R&D Campus appeared first on Commercial Property Executive.

Offices have come a long way over the past five years, evolving into dynamic, adaptable environments that center around employees’ health, and their need to be both productive and connected to each other. Innovative design strategies that focus on flexibility, sustainability and technology are at the forefront of all these shifts.

“We envision workplaces as vibrant ecosystems that adapt to the changing needs of individuals, teams and organizations,” said Gensler Co-CEO Jordan Goldstein. “These are no longer static spaces but curated destinations that inspire purpose, foster innovation and elevate well-being in the office.”

Well versed in office design, Goldstein describes the workplace of the future in detail, in the interview below.

READ ALSO: Office Sector Faces Ongoing Challenges Into 2025

What’s shaping workplace design in 2025? Is there a particular trend that you’re excited about?

Goldstein: This year, we see workplace design shifting away from a focus on traditional real estate metrics and instead prioritizing people’s experience in the places where they work. By creating varied and thoughtfully curated spaces, the office can be more than just a place to work—it can be a destination designed to support productivity, foster connection and provide choice.

We’re making this happen by tailoring environments to people’s unique needs, preferences and work styles. Things like daylight, fresh air and access to green spaces are proven to enhance well-being. Also, we’re seeing a greater need for both private and collaborative spaces at work that balance focus areas with more lively and social zones.

We’re in a moment where we can redefine what it means to go to the office, making it a place people want to be rather than need to be. These shifts signal an exciting transition from static office layouts to dynamic, adaptable environments that foster joy and engagement.

How exactly does the workplace of the future look like? What design elements complement it?

Goldstein: The workplace of the future isn’t just where we work—it’s where we connect, create and thrive. It’s a reflection of who we are, how we collaborate and what we value most.

Some key design elements focus on creating a workplace that is both dynamic and flexible while also leaning into advanced technology. Imagine an office where barriers drop between in-person and remote collaboration, where hybrid meetings are effortless and where digital tools empower every individual to be more connected and productive. From open social hubs to private focus areas, these spaces enable choice and freedom. They empower employees to tailor their surroundings to fit their unique tasks and work styles.

Inclusivity is also at the heart of the future workplace. Thoughtfully designed to embrace everyone, these spaces honor neurodiversity, mobility and individual ergonomic needs. Features such as wellness rooms, biophilic design elements and operable windows or outdoor spaces to provide fresh air will prioritize physical and mental health, while deep-focus quiet zones will cater to employees seeking distraction-free work environments.

We also know that sustainability will be vital to the future workplace. Think of spaces designed to reduce their environmental footprint through all-electric utilities, low-carbon materials, eliminating waste and preserving nature. These future workplaces will not only respond to how people work today but also anticipate evolving needs of the environment around them, ensuring they remain vibrant, relevant and sustainable for years to come.

Indeed, sustainability is a growing trend. How do you implement green practices into your designs?

Goldstein: Sustainability is embedded in everything we do. It’s the starting point for every project. Last year we introduced an industry first—the Gensler Product Sustainability Standards—which have established clear and ambitious performance criteria for the building materials that designers across our company select for our projects worldwide. Starting with some of the highest-impact product categories—things like drywall, carpet tile, insulation, acoustic ceiling tile and furniture—we’re prioritizing the use of low-carbon, healthy materials.

Since launching the GPS Standards, more than 2,800 products have been vetted for compliance and more than 1,500 designers and 1,000 manufacturers have been trained to meet our rigorous criteria.

And we’re just getting started. GPS v2.0 will launch this year, expanding into even more categories of building materials. These standards not only help reduce embodied carbon but also ensure materials are healthier for occupants, installers and manufacturers alike. And in practice, GPS has transformed our project delivery, streamlining sustainable decision-making for our clients.

Have you also been experimenting with AI and how you can incorporate it into your workplace designs?

Goldstein: Innovations in AI are helping us push the creative envelope further by enabling new ways to explore, refine and realize design concepts. We’re not just using it—we’re pioneering it through tools we’ve developed in-house that integrate AI and advanced data analytics.

For example, our AI Sandbox initiative allows our teams to experiment with design iterations in parallel, generating and analyzing hundreds of options in the time it would traditionally take to develop just a few. This approach not only accelerates decision-making but also empowers our designers to think more expansively and unlock new levels of creativity.

READ ALSO: What’s Defining Office in 2025?

We’re also integrating AI into tools that support real-time decision making. This helps us to quickly adapt workplace layouts, ensuring the ever-evolving employee needs are met. By combining the speed and precision of AI with the ingenuity of our designers, we can create environments that enhance collaboration, support hybrid work and promote well-being—all while saving significant time and resources.

One particularly exciting application involves AI-driven visualization tools that transform sketches and concepts into photorealistic renderings almost instantly. This allows us to focus more on the creative process, iterating quickly to perfect design intent and delivering ideas to clients in a way that’s both immersive and inspiring.

Our work with AI isn’t about replacing the human touch—it’s about amplifying it. By integrating these tools into our process, we’re able to explore the boundaries of innovation and create spaces that are not only functional but transformative for those who use them.

Speaking of transformative, please expand on how workplace design influences employee motivation and professional fulfillment.

Goldstein: A well-designed workplace can significantly impact motivation and professional fulfillment by fostering a sense of belonging, purpose and connection. Our research shows that environments designed with employee well-being in mind enhance creativity and engagement.

Some major factors to help enhance the employee experience are creating spaces that support focus, cooperation and relaxation. A good example of this is our design for Edelman UK’s London headquarters, which has a variety of seating types and biophilic touches, enabling employees to work comfortably and feel inspired. These kind of thoughtful design choices not only boost productivity but also strengthen an organization’s culture and workers’ sense of belonging.

Your 2025 design forecast also highlights multi-use districts as a key theme this year. Tell us more about the ways offices can seamlessly integrate into these dynamic environments.

Goldstein: Offices in multi-use districts represent the future of work, where the boundaries between professional, social and personal lives dissolve. These districts aren’t just about where you work—they’re about how you thrive. By embedding offices within neighborhoods with a rich blend of amenities like retail, dining, entertainment and residential spaces, they become part of a dynamic ecosystem.

Take Fifth + Broadway in Nashville, for example. This mixed-use development reimagines the site of the old Nashville Convention Center, turning it into a vibrant hub right in the heart of Music City. It blends retail, dining, entertainment, residential and office spaces, reconnecting iconic landmarks like Honky Tonk Row, the Ryman Auditorium and Bridgestone Arena into a 24/7 neighborhood.

With a 425,000-square-foot Class A office tower and a 350-unit residential tower, it strikes the perfect balance between modern design and Nashville’s rich traditions, creating spaces where people can work, play and truly feel connected to the city.

By prioritizing accessibility and connectivity, these districts encourage teamwork and enhance the overall workplace experience. … People are empowered to flow seamlessly between focused work, spontaneous collaboration and rejuvenating moments of downtime, all within a walkable, amenity-rich neighborhood.

The post Gensler’s Co-CEO on the Workplace of the Future appeared first on Commercial Property Executive.

Long Beach-based engineering and technical services provider Mangan Inc. has signed a 37,000-square-foot lease at Kilroy Realty Corp.’s Aero Long Beach office campus in Long Beach, Calif.

Mangan plans to relocate its headquarters from 3901 Via Oro Ave. to the new office space, with move-in scheduled for November 2025. JLL worked on behalf of the ownership in the leasing deal, while Savills represented Mangan.

Owned and managed by Kilroy Realty, Aero Long Beach is a 957,706-square-foot office campus completed between 1986 and 2000. The complex consists of six buildings located at 3750-3900 Kilroy Airport Way on a 50-acre site.

READ ALSO: Strong Deals and High Prices Keep LA Among Top Office Markets

Over the past 12 months, Kilroy Realty landed more than 15 leases at Aero Long Beach, encompassing more than 141,000 square feet. The property’s tenant roster features SCS Engineers, Canon Inc., DeVry University, Blue Shield of California, SCAN Health Plan and Cushman & Wakefield.

Buildings range in size from approximately 96,000 to 220,000 square feet across two to eight floors, according to the same data provider. 3880 and 3900 Kilroy Airport Way received LEED Silver certification, while the 3760 and 3840 properties were awarded the LEED Gold, CommercialEdge data shows. Amenities include open-air gathering spaces, a fitness center and an Everytable café.

The campus is adjacent to the Long Beach Airport, near Interstate 405. Downtown Los Angeles is 25 miles north.

JLL Managing Directors Jason Fine and Monica Enes worked on behalf of Kilroy Realty, while Savills Senior Managing Director Steve Pisarik and Senior Vice President Bruce Schuman represented Mangan Inc. in arranging the deal.

Los Angeles office vacancy and asking rates

The national office vacancy reached 19.7 percent as of January 2025, a recent CommercialEdge report shows. This represents a 180-basis-point increase year-over-year and a 10-basis-point decrease from the previous month. Los Angeles posted a 16.4 percent office vacancy rate in the first month of the year, lower than the U.S. average.

The national full-service equivalent listing rate was $33.38 per square foot in January. Los Angeles ranked forth among Western markets with highest asking rates, at $42.01 per square foot, trailing San Francisco ($70.56), the Bay Area ($54.38) and San Diego ($42.57).

The post Kilroy Inks HQ Lease in Long Beach appeared first on Commercial Property Executive.

Pacific Tree Capital has purchased 2525 Main, a 143,269-square-foot office property in Irvine, Calif., form J+R Group for $37.6 million. Cushman & Wakefield represented the seller.  

Sold for approximately $262 per square foot, 2525 Main ranks among the highest price-per-square-foot sales for a multi-tenant office building valued over $20 million nationwide post-pandemic. In 2014, J+R Group acquired it from Menlo Equities for $36 million, CommercialEdge data shows.

In 2024, the U.S. office market saw a total of $41 billion in sales, with properties changing hands at an average of $174 per square foot, according to a recent CommercialEdge report. Austin, Miami and Manhattan registered the most expensive deals, prices averaging $396, $365 and $364 per square foot, respectively. Los Angeles ranked sixth, properties in the metro selling for $272 per square foot on average.

A downtown Irvine office building

Completed in 1982 and renovated in 2016, the Class A property at 2525 Main St. is less than 1 mile from Interstate 405 and John Wayne Airport. The five-story asset includes a 41,000-square-foot data center, as well as an on-site cafe, according to CommercialEdge information.

The building’s roster features nine tenants, among which SMS Data Center, Seagra Technology Inc., OSI Digital and Better Tax Relief, the same data provider shows. The property was 98 percent leased at the time of the sale.  

Cushman & Wakefield Vice Chair Jeffrey Cole, Senior Director Nico Napolitano, Managing Director Kevin Nolen, Senior Director Jason Kimmel and Brokerage Specialist Kristen Schottmiller led the team that facilitated the deal for the seller.

The post Orange County Office Asset Trades for $38M appeared first on Commercial Property Executive.

Nationwide, January 2025 office visits were 40.2 percent lower when compared to pre-pandemic January 2019. A confluence of factors, including last month’s polar vortex, as well as the mid-week New Year’s Day, likely resulted in fewer office visits than usual. 

New York continued to lead the return-to-office pack, with office visits in the Big Apple just 19.0 percent lower than in January 2019. Analyzing the year-over-year data indicates that the polar vortex likely had a greater impact on employees in typically warmer climates while employees in cities that tend to have colder winters seemed less affected.

Temporary setback for RTO 

Several factors seem to have converged in January 2025 to temporarily hamper the return-to-office recovery. First, last month brought a polar vortex to much of the United States, compelling Americans to stay indoors and avoid unnecessary trips outside—including to the office. January 1st also fell on a Wednesday this year, and many people likely took advantage of the calendar luck to extend their vacation through the weekend—leading to fewer January office visits compared to years when New Year’s Day falls earlier in the week. 

As a result, the January 2025 bump appeared relatively muted: visits in January 2025 were only 17.7 percent higher than in December 2024, compared to a 31.3 percent month-over-month increase from December 2023 to January 2024. And visits were 40.2 percent lower than they were in pre-pandemic January 2019—a slightly worse showing than the 39.2 percent pre-pandemic visit gap of December 2024. 

New York continues to lead the RTO pack 

The meteorological and calendar challenges seem to have impacted office visits on a metro area as well, with few cities analyzed making significant RTO strides in January 2025. The sole exception was New York, where January 2025 visits were only 19.0 percent lower than they were in January 2019—a slightly smaller visit gap than the previous month.

Many of the cities where residents are used to and equipped for the colder weather—Chicago, Boston, and New York—seemed to have experienced a relatively minimal impact from the arctic blast. The one exception was Denver, which was exceptionally frigid—with subzero temperatures—so that even those used to cold may have opted to work from home. 

But in metro areas where weather tends to be relatively warm—including Atlanta, Houston, Washington, D.C., and Dallas—the impact of the polar vortex was visibly stronger. In these cities, the year-over-year visit gap ranged from 7.5 percent (Atlanta) to 12.0 percent (Dallas)—as employees without proper winter jackets or snow tires likely chose to stay cozy and avoid the chill.

January 2025’s RTO stats may not have been particularly impressive, but the relatively weak office data is likely more a reflection of last month’s unique challenges rather than a slowdown in the RTO momentum. With the weather now back to normal and no mid-week holidays in the near future, the coming months will be critical in evaluating if the RTO is in fact slowing down or whether January just marked a temporary setback within a still unfolding story. 

For more data-driven insights, visit placer.ai. 

This blog includes data from Placer.ai Data Version 2.1, which introduces a new dynamic model that stabilizes daily fluctuations in the panel, improving accuracy and alignment with external ground truth sources.

—Posted on February 26, 2025

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RFR has recapitalized 475 Fifth Ave., a 275,738-square-foot trophy office asset in Manhattan, securing new debt and equity and escaping foreclosure.

The deal includes a new three-year loan amounting to $160 million issued by Citibank and JPMorganChase. The same lenders had held the previous $180 million property debt due in September 2024, according to CommercialEdge information. The recapitalization also includes the infusion of new capital, although the new equity partners remain anonymous.

RFR had partnered with Penske Media Corp. to purchase the asset in 2022. Nuveen Real Estate sold 475 Fifth Ave. for $291 million, CommercialEdge shows, after having invested $60 million in capital expenditures nine years prior.

The 24-story building debuted in 1926, its floorplates ranging from 4,103 to 18,382 square feet. Amenities comprise a newly renovated lobby and a public art program, to name a few. The property achieved LEED Silver certification in 2015.

READ ALSO: 2025 Top Commercial Mortgage Banking and Brokerage Firms

The property is more than 90 percent leased, according to Commercial Observer. Its largest tenant is Penske Media, which signed a long-term lease for nearly 110,000 square feet. The roster also includes design firm Stantec and investment company Kylin Management.

New York Public Library is across the street from 475 Fifth Ave., while Grand Central and Bryant Park are within walking distance.

RFR’s road to stabilization

RFR’s New York portfolio nears stabilization through recent recapitalizations, Co-Founder & Principal Aby Rosen said in prepared remarks. This month, the company landed a $1.2 billion CMBS note to refinance 375 Park Ave., according to multiple sources. The loan retired the office tower’s previous $1.1 billion debt.

The company rounded up 2024 with another significant office deal, having obtained a three-year extension for the note encumbering 17 State St. The 571,000-square-foot property was subject to a $180 million CMBS loan originated by JPMorganChase.

Manhattan’s mixed office signals

Manhattan’s office market has seen significant changes across several key markers since the beginning of the year, according to a recent CommercialEdge report.

The borough’s vacancy rate climbed only 10 basis points year-over-year to 16.6 percent in January—well below the national average of 19.7 percent. Meanwhile, listing rates dropped 3.6 percent year-over-year and settled at $68.2 per square foot, while the national office rents were up 5.8 percent during the same interval.  

However, office lending has shown signs of revival. Earlier this month, Ivanhoé Cambridge secured a $1.12 billion loan for the refinancing of a 42-story trophy tower in Midtown Manhattan.

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Overall, 865 office projects were awarded a level of LEED certification in 2024, up by 51 from 2023, accounting for 267 million square feet combined. Yet, the number of LEED Platinum certifications dropped from 72 to 63, across 18.1 million square feet. Furthermore, 39 were project certifications and 24 recertifications. Sorting USGBC’s data by property type, award level and square footage, we have extracted some of the largest ones. Here is the list of the top five LEED Platinum-certified buildings in the U.S.

1. 71 South Wacker, Chicago 

Chicago’s previously named Hyatt Center renewed its LEED Platinum certification in October 2024 with a scorecard of 81 points. Its first LEED Platinum certification was awarded in July 2019.  

The 48-story, 1.7 million-square-foot office tower also renewed for the 17th year its ENERGY STAR certification (first one given in 2008), and also holds a Toby award, a BOMA 360 Performance Program designation and IREM Sustainable Property certification. Its transit score is a perfect 100, and the walking score is not far behind, at 97.  

The asset has been under Irvine Co.’s ownership umbrella since 2010, sold by PSP Partners for $625 million. Current tenants at the tower include IBM, Colliers and Goldman Sachs, according to CommercialEdge data.  

2. 540 West Madison, Chicago 

Second largest in the list is another Chicago-based asset, 540 West Madison. The 31-story, 1.1 million-square-foot property received its fourth LEED Platinum certification in January 2024, with a scorecard of 86 points. The first three LEED Platinum awards were issued in 2009, 2014 and 2018.  

The project also received ENERGY STAR ratings in 11 of the 21 years of its existence and holds a BOMA 360 Performance Program designation. Noteworthy features pertaining to sustainability include rainwater harvesting and rooftop bees. The rainwater harvesting system comprises three 1,000-gallon cistern tanks on the sixth floor and three 1,500-gallon cistern tanks on the garage level. The collected rainwater is used to irrigate the garden on the sixth floor and the plaza at the main entrance.  

Meanwhile, on the 29th floor, the building has an apiary with roughly 150,000 bees. Their honey is bottled and passed out to tenants, visitors and students, and used in specialty drinks at the café located on the building’s ground floor. In 2013, Third Millenium Group acquired it from the Bank of America for $350 million and one year later it completely renovated the asset. Current tenants at the property include BMW, DRW, Evolent Health and SAC.  

3. Market Center, San Francisco 

Located in San Francisco, Market Center is a two-skyscraper complex comprising 555 and 575 Market Street in the metro’s Financial District. The group project spans across nearly 900,000 square feet and was recertified to the Platinum level in November 2024.  

The assets’ sustainability features include automated control systems, LED lighting systems installed throughout the common areas, a real-time energy management platform that monitors energy use in five-minute intervals and building systems that optimize performance. In addition, low-flow fixtures help conserve water, and are used in combination with real-time water usage meters.

Air quality is ensured via air scrubbers. Mechanical systems increase the supply of outdoor air and continuously cycle fresh, filtered air throughout the buildings, while monitoring real-time air quality levels, measuring indicators such as carbon dioxide, particulate matter, VOCs, temperature and humidity.  

Paramount Group acquired both buildings in 2019. The previous owner, EQ Office, had acquired them in 2016, and cosmetically renovated them a year later. Tenants include Waymo, Pacific Maritime Association, Amazon, the Honorary Consulate of Norway and Norcal Group.

4. One Sansome Street, San Francisco 

Rising 42 stories high in San Francisco’s North Financial District, One Sansome Street has maintained LEED Platinum certification since 2014, when it became the first building in San Francisco to achieve LEED Platinum v4 certification. In April 2024, the 738,880-square-foot property was recertified to the LEED Platinum level with a scorecard of 80 points.  

The office tower has a rare amenity in the city, as it is one of the few buildings in San Francisco where the BART station is directly accessible from the lobby. On the ground floor, One Sansome has nearly 16,000 square feet of hospitality and event space including a historic 8,000-square-foot atrium, fully restored in 2023. For 21 years since 2003, the project has been an Energy Star certified building.  

Since 2010, One Sansome Street has been under Barker Pacific Group’s ownership. The firm is behind the sustainability upgrades and improving the LEED Gold award it held at the time of the purchase, to LEED Platinum in 2014, 2019 and 2024. Tenants at the property include Sotheby’s, Newmark, HIG Capital and Wish. 

5. 560 Mission Street, San Francisco 

The 31-story high-rise at 560 Mission Street in San Francisco’ South Financial District recertified its LEED Platinum designation in January 2024, with a scorecard of 81 points. The building has maintained its Platinum rating since 2010. 

Owned by Hines, the asset was built in 2002 and encompasses 731,682 square feet of space with ground floor retail. The largest tenants in the building are J.P. Morgan and Ernst & Young. Recently, J.P. Morgan announced expanding its footprint in the building by another 60,000 square feet. 

560 Mission is all electric, and since 2023 it has been 100 percent powered by renewable energy, produced at a solar installation atop the Sunset Reservoir in San Francisco and at a wind project in Mojave, Calif. The renewable electricity is purchased through a community choice energy program. Like 540 West Madison in Chicago, this San Francisco property also has two rooftop beehives. 

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Aaronson Rappaport Feinstein & Deutsch LLP has decided to have its headquarters remain at the Grand Central district tower through at least 2042, having signed a 15-year lease extension with L&L Holding Co.

The space totals 55,269 square feet at 600 Third Ave., the firm’s contemporary 42-story Midtown East office tower, where it has been a tenant since 2010. The law firm will maintain the 42,764 square feet it occupies on the fifth and sixth floors.

Another law firm, Bond Schoeneck & King, signed a seven-year lease extension at 600 Third Ave. It has occupied space there since 2014. It will maintain the 12,505 square feet it occupies over the whole 22nd floor through at least 2033.

The property at 600 Third Ave., built in 1970, carries 575,254 square feet over the entire western blockfront between East 39th and East 40th Streets. It was recently renovated, including lobby upgrades and building system improvements.

READ ALSO: Top 100 Office Leases of 2024 Point to Stabilization

L&L Holding was represented by an in-house team of Jonathan Tootell, Tanya Grimaldo and Giannina Brancato. Mark Weiss and David Mainthow of Cushman & Wakefield, and Larry Bank of Matador Capital Management represented Aaronson Rappaport.

Bond Schoeneck & King was represented by Jeffrey Peck and Daniel Horowitz of Savills.

Peck told Commercial Property Executive that pockets of the NYC real estate market are tightening.

“However, there are still many value opportunities available,” Peck said. Most landlords are willing to negotiate beneficial deals for tenants that include building space with no out-of-pocket costs—including furniture and wiring, he added.

“It’s still a favorable time to be a tenant, especially when partnering with a real estate advisor who knows which landlords are ready, willing and able to compete for high-credit occupiers.”

Flight to quality as the new standard

Some Midtown NYC corridors are seeing premium office rents approach pre-pandemic levels while lease activity is booming, according to Lisa Flicker, senior managing partner & head of real estate at Jackson Lucas. In these areas, availability has dropped to its lowest point since 2021, signaling a robust recovery in prime office space.

“Reflecting the momentum in executive hiring within the office asset class, the premium sector is experiencing a notable rebound,” Flicker said.

The flight to quality is no longer a trend but the new standard, driven by companies reassessing remote work and increasing demand for high-quality, centrally located office spaces, she explained.

As firms push for more in-office time from their executives and team members, they raise the bar by investing in workplaces with top-tier amenities like fitness centers, cafes, conference rooms, outdoor spaces and childcare facilities. “Beyond perks, I see in-office factors like air quality and lighting becoming factors in attracting top talent,” Flicker added.

Leasing activity in Midtown saw remarkable growth in the fourth quarter of 2024, a strong sign of a continued rebound for the sector, according to AmTrust RE President Jonathan Bennett.

“Primely located office buildings with access to numerous transportation options and quality retail and restaurant offerings continue to see strong tenant demand,” Bennett told CPE.

The upward trajectory for these assets led to AmTrust RE’s acquiring 360 Lexington Ave., a 24-story office tower steps from Grand Central, late last year. “With a positive outlook on the future of Midtown’s market, we expect modern, tenant-focused office properties to continue seeing strong leasing activity,” Bennett said.

Given the “return to office” mindset in many industries across the city and the U.S., many people want to live near work.

For example, at The Perrie condo development on 234 East 46th St., more than 50 percent of buyers and prospective buyers work just blocks away at an office ideally located like 600 Lexington, according to Nick Riback of Corcoran.

Nearby 520 Fifth Ave. is set to offer over 200,000 square feet of boutique office space and residences, with over 90 percent sold. This property, on the same street as the Empire State Building, will be the second-tallest building on Fifth Avenue and a 10-minute walk from the 600 Third Ave. property. JLL is the leasing company for the building’s commercial office space.

Two years ago, law firm Polsinelli extended and expanded its lease at L&L Holding Co.’s 600 Third Ave., signing a 10-year extension through 2036 at the 42-story skyscraper, adding 13,129 square feet on the 33rd floor.

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Employees began moving into the building in November. Currently FNB Financial Center is about 70 percent occupied, with roughly half of that space taken up by FNB. A JLL team led by Market Director JC Pelusi represents ownership in commercial lease negotiations.

Buccini Pollin Group was the lead developer of the building, which was designed by Gensler. Since breaking ground in 2021, the development of FNB Financial Center has generated over $7 million for a Hill District community-directed reinvestment fund and put over $3 million into programs to benefit minority-owned businesses, along with the Hill District Federal Credit Union, according to Buccini Pollin.

The tower features an amenity floor with a fitness center, conference rooms, lounge space and a Wi-Fi-enabled, tenant-only terrace. The bank’s space includes a trading floor for capital markets employees, with a suspended LED stock ticker visible from the building exterior.

READ ALSO: Top 100 Office Leases of 2024 Point to Stabilization

The property has achieved LEED Gold certification, with a number of health- and wellness-oriented features, including floor-to-ceiling windows for natural light and advanced HVAC systems. There is also a ground-floor retail space of 15,000 square feet, with a coffee bar, full-service café and public plazas.

Pittsburgh’s soft office market

In the fourth quarter of 2024, the Pittsburgh market turned in negative net absorption of 109,953 square feet, spurred by losses totaling 142,437 square feet in the central business district, according to JLL data. Much of that was driven by EQT’s downsize at 625 Liberty and FHLB’s departure from 601 Grant St.

Even so, “the completion of FNB Financial Center marked a significant milestone for Pittsburgh’s office market in the fourth quarter,” JLL noted in its market report. “Despite challenging market conditions, the project delivered nearly 70 percent preleased.”

The completion of the building not only changed the downtown Pittsburgh skyline, but it “injected new life” into the Lower Hill District, JLL reported, and will likely be a catalyst for future development in the area.

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That quarter helped to create a 13 percent increase in full-year 2024 net lease investment volume, totaling $43.7 billion.

Industrial and logistics increased its share to 64 percent in the fourth quarter from 54 percent a year earlier. In 2024, net lease investment volume for industrial assets increased 87 percent from the prior year.

Net lease properties are characterized by a lease structure in which the tenant agrees to pay a portion or all of the taxes, insurance fees and maintenance costs in addition to rent.

Predictable cash flow

The net lease sector’s strong performance was generated by its predictable cash flow and mass appeal to investors seeking solid risk-adjusted returns, Will Pike, vice chairman of net lease properties for capital markets at CBRE, told Commercial Property Executive.

“We expect continued momentum this year, especially in retail and the industrial sector, as capital has proven to prioritize low-risk opportunities amid potential capital markets volatility in 2025,” he said.

Joseph Yiu, a partner at Leste Group, a global alternative investment manager, told CPE he was not surprised because the asset class has always performed well in times of uncertainty.

“With fundamentals and rent growth starting to deteriorate and plateau in other commercial real estate asset classes, 2 percent to 3 percent annual escalations on long-term net leases are beginning to look attractive on a relative value basis,” according to Yiu. “Cap rates on net leases have also widened over the last 24 months, so obtaining neutral or positive leverage is slowly becoming available for creditworthy borrowers.”

Deals consummated at year-end

As some traditional retailers struggle to maintain their customers or credit ratings, Damon Juha, partner & real estate practice vice chair at Saul Ewing, sees investors explore outside the traditional single-tenant NNN retail deals into other product types, such as industrial.

“There seemed to be a convergence of influences: investors responding to the Fed’s interest rate cuts, investors paying all cash (particularly for smaller deals such that the interest did not matter) and parties needing to consummate deals before year-end, particularly in light of the change of the administration,” Juha said.

READ ALSO: Understanding the Net Lease Reset

Net lease deals have historically provided a relatively low-risk alternative at price points where private investors can enter the market without financing, Juha added. ”Our clients continue to want to do deals, but time will tell if inflation risk and interest rates quell this sentiment.”

Growth in logistics and distribution facilities reflects trends like the continued expansion of e-commerce, supply chain shifts and the need for strategically positioned assets, according to Lanie Beck, Northmarq senior director, content & marketing research.

“Private investors drive the bulk of transaction activity, even as economic pressures like elevated interest rates and inflation influence the market,” Beck said.

Recent cap rate increases indicate a recalibration of risk, while stabilized single-tenant net lease properties continue to attract the attention of both private and institutional buyers, she observed.

“Industrial assets, as noted previously, have outperformed. On the other hand, retail and office sectors face mixed dynamics, with investors focusing on essential tenants and niche opportunities like health care or medtail,” Beck added. “Ultimately, the net lease market’s resilience comes from its knack for striking the right balance between stability and opportunity. The sector offers investors a relative haven in uncertain times.”

NNN energy leases

It’s also worth looking at the rise of triple-net multifamily leases, according to Sean Doak, chief revenue officer at PearlX.

“While most often employed in mixed-use developments, NNN energy leases that provide multifamily properties with energy amenities like solar power have been on the rise in the sector as a solution to various problems, most notably as a creative source of capital in a constrained investment environment,” Doak said.

“With elevated interest rates, limited capital availability, rising construction costs and aggressive building code regulations, multifamily developers are having to think outside of the box to make projects financially viable.”

Through an NNN energy lease, multifamily developers can lower development costs, comply with stringent regulations and enhance cash flow after the property’s delivery, all while offloading the insurance, taxes and maintenance overhead onto the tenant—a key feature of what makes NNN leases attractive in the first place, Doak said.

However, not all net lease is the same, Dave Sobelman, founder & CEO of publicly traded REIT Generation Income Properties, told CPE.

“It would be important to disaggregate the data into more defined categories considering more specific outlooks,” Sobelman said.

“For instance, industrial has become a very popular asset class since the advent of the pandemic. However, the bulk of industrial transactions in today’s market are typically sale-leaseback transactions to non-investment grade tenants who require capital and can no longer borrow at rates accretive to their balance sheets. These transactions were few and far between before 2020.”

Additionally, he noted that late in 2024, overall net lease transaction volume may have increased slightly from 2023, but it is still at historically low levels, reflected in a Northmarq report.

“These low levels of transactions have not been seen since approximately 2009 to 2010, immediately after the GFC,” he added.

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Chicago’s office market ended 2024 with few positive outlooks. New construction was muted, while overall asset values declined. Although office utilization remained low, high-quality space was still in demand, as highlighted by some significant lease deals.

There were some bright spots, however, including the launch of a new framework aimed at fast-tracking office-to-residential conversion projects. As the sector continues to transform, 2025 looks like it might be another challenging year for office, the latest CommercialEdge report suggests.

New construction stalled in 2024

At the end 2024, Chicago’s office market held just 870,000 square feet of office space under construction. This was 0.3 percent of existing stock, 50 basis points below the national figure. Utilization rates leveled off and hybrid work is here to stay, but there are still pockets of demand for high-quality space.

Chicago lagged all its peer markets in terms of office space under construction. Boston (3.4 percent of stock underway) and Miami (1.5 percent) led growth, followed by Los Angeles (0.7 percent) and Manhattan (0.6 percent).

Fulton Street Cos.’ 919 West Fulton remained the largest office building still under construction at the end of the year. In July, general contractor Skender topped out the $300 million project, which encompasses 369,000 square feet. Harrison Street will anchor the asset, having preleased 112,000 square feet.

Developers completed seven projects encompassing slightly more than 1 million square feet of office space in 2024. This amount was down more than 50 percent year-over-year and represented 0.3 percent of existing stock, 30 basis points below the national figure.

The largest office project completed in the metro last year was Sterling Bay’s 360 North Green in the West Loop. The 500,000-square-foot, 25-story building had been nearly fully preleased prior to completion, with Boston Consulting Group on the roster.

Construction starts were few and far in between last year across metro Chicago, as investors and developers are waiting for better economic circumstances. A total of six properties broke ground, encompassing just under 950,000 square feet.

City authorities emboldened office-to-residential projects

Office-to-residential conversions are growing in popularity among owners and investors in the sector, as they present an opportunity to infuse value in underutilized assets. In November last year, Chicago’s Departments of Planning and Development and Transportation sought to create a framework for these projects to take shape and benefit from Tax Increment Financing. Last month, the two departments officially launched this initiative, named A Vision for LaSalle Street, as it is focused on the area between Wacker Drive and Jackson Boulevard.

According to the city’s website, proposed conversions submitted for approval across the city totaled more than $750 million in total investments as of November last year, with nearly $250 million in TIF support already approved. These projects encompass some 1.6 million square feet of unused space, of which a significant share is office.

CommercialEdge’s Conversion Feasibility Index helps developers by ranking buildings across the largest office markets in the U.S., with the aim to identify the most likely candidates for office-to-residential conversion. At the beginning of this year, Chicago had 131 office buildings with a CFI score between 90 and 100, placing them in Tier 1—the highest in terms of conversion potential. These encompassed more than 1.5 million square feet of office space.

In October last year, R2 Cos. and Campari Group secured $28 million in TIF funding for the conversion of the office building at 79 W. Monroe St., in the city’s CBD. The 1913-built property is slated to include 117 residential units, with construction start scheduled sometime this year. This Tier 1 property boasts a perfect 100 CFI score, making it ideal for residential conversion.

Investment volume slightly grew while asset values declined

Investment activity across Chicago’s office market increased in 2024, with $1.1 billion changing hands, up 14.6 percent year-over-year. A total of 74 properties traded last year, encompassing 12.4 million square feet.

Average prices in the metro remained some of the lowest among similar markets. Chicago office buildings traded for an average of $85.13 per square foot in 2024. It was followed by Boston ($249.27), Los Angeles ($281.07), Manhattan ($369.33) and Miami ($400.07).

In June, Beacon Capital Partners acquired the office tower at 333 W. Wacker Drive for $125 million, or $144 per square foot. This remained the largest single-asset transaction in the metro last year. Another significant transaction was the $74 million acquisition of the 882,071-square-foot asset at 1400 American Lane by Sigma Plastics Group. At the start of last year, R2 Cos. paid $60 million for the 661,482-square-foot Crain Communication Building, at 150 N. Michigan Ave.

Asset values continued to drop across the metro. These three examples alone changed hands for a combined $259 million last year, which was a 50.9 percent drop in value from their previous total price.

Vacancy failed to improve

Vacancy across Chicago’s office market rose 70 basis points in 2024, to 18.8 percent at the end of the year. This was 100 basis points below the national figure. Some large lease agreements took shape across the metro last year, with high-quality space still in demand, either in newly constructed or established assets.

Chicago lagged all its peer markets in terms of vacancy. Miami’s rate was the lowest (15.2 percent), followed by Los Angeles (16.0 percent), Manhattan (16.6 percent) and Boston (17.0 percent).

In September last year, law firm Smith Gambrell & Russell signed a 57,000-square-foot agreement at 155 N. Wacker Drive, where it will relocate next year. The John Buck Co. is the owner of the 1.2 million-square-foot property.

Another high-profile deal closed in February, when Pinterest agreed to occupy 24,000 square feet at 10 and 120 S. Riverside Plaza, owned by Hines and Ivanhoé Cambridge. The Class A, 1.4 million-square-foot asset underwent a $75 million redevelopment.

Perhaps most indicative of the state of Chicago’s office market was a 100,000-square-foot agreement closed in January last year. Heitman signed a 10-year extension with tenant Mesirow at 353 N. Clark St. This represented a 65,000-square-foot downsizing from the financial services firm’s previous arrangement.

Coworking providers expanded their presence

Chicago’s office market had 6.9 million square feet of shared space in 2024, which represented 2.1 percent of its entire inventory. The metro’s growing coworking segment remained a bright spot, with demand at healthy levels. Chicago lagged some of its peers, but not by a lot. Miami had the most, at 3.8 percent of its office stock as coworking space, followed by Manhattan (2.3 percent), Los Angeles (2.2 percent) and San Francisco (2.2 percent).

In September, flexible workspace provider Expansive signed a deal for the 35th floor of Two Pru, where it aims to open its seventh location in the metro. The space was undergoing a renovation at the time. Expansive partnered with Wanxiang Real Estate Group and Riverside Investments for the new location.

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SPARC Kips Bay will transform an entire city block at East 25th Street and First Avenue on Hunter College’s Brookdale Campus into a life science innovation, career and education hub with more than 2 million square feet of academic, public health and life science space. The project was first announced in October 2022 and is expected to create more than 3,100 permanent jobs and generate $42 billion in economic impact over the next 30 years. NYCEDC expects to start deconstruction of the campus by the end of this year.

The Innovation East development, basically around the corner at 455 First Ave., will replace the former Public Health Lab with a new life science hub. The Public Health Lab will relocate to a new, modern facility at Harlem Hospital, which is expected to be complete by the end of this year. Demolition of the existing 455 First Ave. building is expected to take place in 2026, with construction of Innovation East starting in 2027.

To dive more deeply into SPARC Kips Bay, the campus will include life science research labs for companies of various sizes; clinical classrooms and teaching labs for three City University of New York schools: Hunter College School of Nursing, CUNY Graduate School of Public Health & Health Policy and Borough of Manhattan Community College; outpatient ambulatory care services and a training simulation center for NYC Health + Hospitals (H+H); a new forensic pathology center for the Office of the Chief Medical Examiner; and community and retail spaces.

The project will also feature more than 1.5 acres of public improvements, including new publicly accessible open space, a new ADA-accessible 25th Street pedestrian bridge over the FDR Drive, streetscape improvements and flood protection measures.

READ ALSO: Life Science Trends to Watch in 2025

In February 2024, NYCEDC issued a Request of Expressions of Interest to identify a tenant to operate a life science center at SPARC Kips Bay. NYCEDC will potentially allocate up to $100 million of city capital in support and expects to announce its selection in the spring.

In the meantime, last September NYCEDC chose Skanska as the construction manager to oversee SPARC’s first phase, of more than 600,000 square feet, following deconstruction of existing buildings on the Hunter College campus. The total anticipated contract award was expected to be about $1.6 billion, and construction is scheduled to begin at the end of this year and to be completed in 2031. 

The total anticipated contract award is expected to be in excess of $1 billion, and construction is expected to begin at the end of this year and to be completed in 2031.

Currently, NYCEDC expects to release an RFP seeking developers to build 1 million square feet of life science space and modern facilities for H+H and OCME as part of SPARC’s second phase.

The 500,000-square-foot Innovation East will be more or less just across First Avenue from SPARC, at 455 1st Ave., and will have the potential to create more than 1,000 permanent jobs. New York City’s own Taconic Partners is among the major players in this project, having conceived it in response to an RFEI from the city in 2018.

NYCEDC did not reply to Commercial Property Executive’s request for additional information.

Addressing the labor shortage

To the extent that this expansion of the Kips Bay Science District is aimed at connecting the projects’ eventual tenants into New York City’s educational institutions, this could be a smart strategic move.

A mid-2024 life sciences outlook from Cushman & Wakefield remarked that even though hiring in the sector was lackluster, finding talent to fill certain positions remains challenging in today’s labor market. In some markets, employers must post job openings up to five times to fill specific roles, according to the report.

In New York City, Cushman & Wakefield reported, life sciences job postings were open for a median of 24 days.

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The partnership of Highline Real Estate Capital, Square2 Capital and Lone Star Funds has acquired 401 E. Las Olas Blvd. in Fort Lauderdale, Fla.’s financial district. CBRE represented the seller of the 410,561-square-foot office asset and secured acquisition financing.

The same week, the office property at 350/450 E. Las Olas Blvd. changed hands for $208 million in what was, at the time, the market’s largest transaction in a decade.

DWS, an affiliate of Deutsche Bank’s asset management arm, sold both properties for a combined $428 million, according to Commercial Observer.

READ ALSO: Office Sector Faces Ongoing Challenges Into 2025

DWS had acquired 401 Las Olas in 2016 for $220 million, according to CommercialEdge information. Completed in 2002 and renovated in 2005, the 23-story office tower features floorplates averaging 24,397 square feet and four levels of parking, as well as retail space. The building is LEED Gold-certified.

The 2.4-acre property occupies a full city block. Bank of America, Greenberg Traurig, Boies Schiller Flexner, Motorola Solutions and UBS are among its tenants.

CBRE Vice Chairman Christian Lee and Vice President Sean Kelly led the team that represented the seller. In addition, Vice Chairmen Tom Traynor and Tom Rugg, together with Senior Vice President Amy Julian and First Vice President Andrew Chilgren, assisted the buyer in sourcing acquisition financing. Director Adam Spengler, Senior Associate Tom Rappa, Associate Henry Fenmore and Financial Analyst Matthew Lee were also instrumental in the deal.

Fort Lauderdale, an attractive market

“Downtown Fort Lauderdale has exploded in recent years with new residential,” Square2 Capital Principal Jay Caplin told Commercial Property Executive.

“It is attracting a phenomenal mix of amenities, retail and restaurants. It is also the only 24/7 submarket in Broward County, located near executive decision-makers. This combination, especially in a post-COVID work environment, creates an attractive space for recruiting new talent and returning employees to the office.”

READ ALSO: Net Effective Office Costs Edge Up

Caplin added the trend is not new and it’s expected to continue, especially since there is no new office construction planned along the Las Olas Boulevard corridor.

“The vast majority of any development in downtown has been for-sale and for-rent residential, and some hotels,” he noted.

According to Caplan, 401 Las Olas is among the top-tier buildings in South Florida and one of only two Class AA trophy office buildings on Las Olas Boulevard.

With an occupancy of 94 percent and a purchase price substantially below replacement cost, “given the very high quality of the property, it represents a highly attractive and opportunistic investment for the new owners,” he said.

One of South Florida’s ‘most exciting secrets’

“The rise of Fort Lauderdale’s office market is quickly becoming one of the region’s most exciting secrets,” JLL’s Brady Titcomb, who specializes in the Fort Lauderdale office market, told CPE.

“It offers a prime location for businesses seeking the vibrancy of an urban center in a unique waterfront setting without the hefty price tag. You can enjoy all the lifestyle perks of Miami but at a fraction of the cost and without the heavy traffic and congestion,” Titcomb added.

“The sales of 401 Las Olas and 350/450 Las Olas during an otherwise turbulent capital markets environment validate that downtown Fort Lauderdale is a secure investment destination,” mentioned Colliers Vice Chair Jonathan Kingsley.

“The two properties traded at premium prices on a per-square-foot basis, albeit with higher cap rates than prior sales. This is a direct result of the increase in lease rates and net operating income in a dynamic leasing atmosphere in downtown Fort Lauderdale.”

A strong alternative to pricier markets

Fort Lauderdale’s office market has become a strong alternative to New York’s Park Avenue, Miami’s Brickell and Los Angeles’ Century City, noted Todd Rosenberg, co-founder & chairman of Pebb Capital.

Pebb Capital’s Class A office property, 110 East Broward, has led leasing activity in Fort Lauderdale’s CBD, securing over 119,000 square feet of tenancy since last year. Notable new leases include ABA Centers of America (48,000 square feet), Seacoast Bank (7,795 square feet), and Ludlow Coffee Supply opening in 2025.

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Landrock LP and Pendulum Property Partners have acquired a 16-story, 329,431-square-foot trophy office tower in Glendale, Calif. The Class A asset changed hands at a significant discount from its previous sale, in a deal arranged by Newmark.

Goldman Sachs Asset Management and Cruzan sold the property at 505 N. Brand Blvd. for $56 million, The Real Deal reported. The partners had purchased the building in 2018 for $93.5 million from Principal Real Estate Advisors.

Built in 1986, the tower recently underwent extensive capital improvements totaling $14 million or approximately $43 per square foot. The LEED Gold-certified building also includes 3,500 square feet of retail, as well as an on-site car wash and dry cleaners. The property features a total of 1,153 parking spaces in a multi-level structure.

READ ALSO: Strong Deals and High Prices Keep LA Among Top Office Markets

The asset is leased to a diverse roster of 19 tenants, with a weighted average remaining lease term of 4.2 years. One of them is Phonexa, a software company that added more than 18,000 square feet to its lease at 505 N. Brand Blvd. in April 2023, bringing the total occupied space to 42,000 square feet across the building’s top three floors.

Other tenants include UnitedHealth Group, CalSTRS, KB Financial Group, Packer, O’Leary & Corson law firm and Martin & Associates, an accounting firm.

The building’s location on North Brand Boulevard provides access to the 134 Freeway. The property is also within walking distance of retail and residential amenities, including The Americana at Brand, a 1 million-square-foot mixed-use property, and Glendale Galleria. Downtown Los Angeles is some 10 miles south.

Newmark team

Newmark Co-Head of U.S. Capital Markets Kevin Shannon, Vice Chairmen Ken White, Rob Hannan, Michael Moll and Laura Stumm, Executive Vice Chairman Kevin Donner, Managing Director Ben Lushing and Director Alex Beaton represented the seller.

Newmark Co-President of Global Debt & Structured Finance Jonathan Firestone, Vice Chairman Blake Thompson and Director Henry Cassiday led market financing alternatives throughout the transaction.

Los Angeles market moves

The sale is another recent example of office assets in the Los Angeles market trading at discounted prices. Earlier this month, a joint venture between Cross Ocean Partners and Palisade Group purchased 4500 Park Granada, a 222,667-square-foot office building in Calabasas, Calif., for $69.4 million from Gemdale USA in a deal also brokered by Newmark. The property previously changed hands in 2021 for $79 million, according to CommercialEdge information.

And late last year, Los Angeles County acquired The Gas Company Tower, a 1.3 million-square-foot office building in the city’s downtown, for $200 million. The property had been sold by Wilmington Trust after a September foreclosure on a $350 million CMBS loan.

In October, Southwest Carpenters Pension Trust acquired Union Bank Plaza, a 40-story, 701,888-square-foot office tower in Los Angeles for $80 million from Waterbridge Capital. The office building had sold for $104 million in April 2023.

The post Landrock, Pendulum Buy LA Office Tower for $56M appeared first on Commercial Property Executive.

Stark Office Suites has extended its lease at Jack Resnick & Sons’ 110 E 59th St. in Manhattan by 10 years. The flexible office space provider occupies the 22nd and 23rd floors of the 612,181-square-foot building. 

In conjunction with the renewal, Resnick and Stark have agreed to partner on upgrading the 26,568 square feet the latter occupies at the property. Renovations will include improvements to the reception, common areas, meeting spaces, kitchenettes and restrooms.  

Stark Office Suites opened its first locations in 2004 and has since grown to 13 flex office spaces across New York City, Westchester, Long Island and Connecticut.

A Manhattan tower on 59th Street

Completed in 1969 by Resnick & Sons and designed by W. M. Lescaze, the high-rise on 59th Street rises 37 stories just off Park Avenue in the Plaza District.

Its tenant roster features Zelnic Media Capital, Royalty Pharma, Cantor Fitzgerald and Estee Lauder. The property was awarded the LEED-Gold certification for operation and management, according to CommercialEdge information.  

There were 273 coworking locations in Manhattan as of November, totaling 11.3 million square feet, CommercialEdge research shows. Trailing behind Manhattan, Chicago and Washington, D.C., have 6.8 million square feet and 6.7 million square feet, respectively, out of the 136.3 million square feet of flex office spaces across the U.S.

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Ogilvie Properties Inc. has sold Tech Center VI, a mid-rise office building in Colorado Springs, Colo., to Alloy Real Estate Capital LLC for $17.3 million. Cushman & Wakefield arranged the deal and represented the seller in the transaction.  

The 104,702-square-foot property had been under Ogilvie Properties’ ownership since 2019, when the company acquired it from Pace Properties for $12.1 million, according to CommercialEdge data.  

Executive Director Aaron Johnson, Managing Director Jon Hendrickson and Senior Associate Mitch Veremeychik from Cushman & Wakefield worked on behalf of the seller.

A closer look at Tech Center VI

Completed in 1985, Tech Center VI is a three-story office building situated on a 7-acre site at 5575 Tech Center Drive. While under the former ownership, the property underwent upgrades, which included a renovated lobby, restrooms and spec suites. The roster currently features 17 tenants, among which Workplace Resource, Benefit Dynamics Co., Engineering Systems Inc., Allied Universal and Moneywell. Most of the tenants are in the aerospace & defense government contractor industries. The property was 97 percent leased at the time of the sale.  

Tech Center VI is less than 7 miles north of downtown Colorado Springs, near Interstate 25. Denver is some 60 miles north.

Denver’s office market saw a slowdown in development activity, with 680,961 square feet of office space under construction across seven properties as of November 2024. Even though office deals in the city dropped by 31.3 percent year-over-year, Denver outperformed San Francisco and ranked among the top U.S. markets for investment activity, a recent CommercialEdge report shows.

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Additionally, the metro logged $599 million in office sales last year. This figure represents a considerable increase, nearly doubling the amount registered in 2023, but still the lowest investment volume among gateway markets.

The city also strengthened its position as one of the most active life sciences markets across the country, ranking seventh by its construction activity in the sector. Between 2019 and October 2024, more than 1.8 million square feet of life science space across nine projects broke ground in the metro.

More office projects to come online

Last year, Seattle’s office sector saw the delivery of 11 properties, accounting for 4 million square feet—about 2.2 percent of the metro’s total inventory. Compared to 2023, this figure increased by more than a third.

Among gateway markets, Boston took the lead with almost 6.4 million square feet completed, while Seattle was close behind. Chicago (1.0 million square feet) and Los Angeles (955,510 square feet) were at the opposite pole.

In the second quarter of last year, Office Properties Income Trust completed the renovations of Unison Elliott Bay, a three-building, 300,000-square-foot life science lab, R&D and office space. The project began in March 2022.

In terms of pipeline, more than 5.1 million square feet of office space across 10 projects were under construction at the end of December, which will add about 2.8 percent to the market’s stock. Of them, two developments totaling 691,700 square feet broke ground in 2024.

One of the largest projects under construction that is scheduled to come online this year is Amazon’s Tower 1 at Bellevue 600. The 43-story building will comprise more than 1.1 million square feet and is the first phase of a development that is set to also include a 31-story high-rise.

Government agencies focus on office-to-residential conversions

With the trend of converting office spaces into residential units gaining momentum, CommercialEdge has launched a tool designed to evaluate the feasibility of repurposing properties across different markets. According to its Conversion Feasibility Index, Seattle ranks high, with around 4.7 million square feet of office space demonstrating strong potential for conversion.

Last summer, the Seattle City Council enacted a legislation aimed at removing regulatory obstacles by granting extensive exemptions from dimensional and design development standards. This initiative is intended to address the issue of vacant office spaces across the city, with a particular focus on the downtown area.

In August, Orton Development proposed a conversion plan for the almost 100-year-old Joseph Vance Building. If approved, the project would generate about 155 residential units. The building’s CFI score stands at 92, according to CommercialEdge, making it a strong candidate for repurposing.

Office sales register new heights

Seattle reached $599 million in office investment volume last year, almost double the figure registered in 2023. Although assets traded at an average of $260.45 per square foot, significantly surpassing the national average of $175.97, the market experienced the lowest transaction volume among gateway metros.

Manhattan registered the highest sales nationally, with $3.9 billion in assets changing hands. Washington, D.C. ($2.6 billion) and Los Angeles ($1.9 billion) trailed behind.

In September, Alexandria Real Estate Equities sold 1165 Eastlake Ave. E, a 100,086-square-foot life science building for $150 million. Fred Hutch Cancer Center acquired the asset completed in 2021. The developer also formed a joint venture with the buyer for two adjacent buildings, where it will maintain a 30 percent ownership.

A month earlier, the first skyscraper in Seattle, The Smith Tower, changed hands. A group of local investors led by GT Capital bought the 42-story property from Goldman Sachs. The 268,700-square-foot tower dates from the 1910s and was renovated in 1990s and 2010s.

Completions lead to surge in vacancy rates

Seattle’s office vacancy rate at the end of December clocked in at 26.3 percent, rising 380 basis points year-over-year. During the same month, the national average was 19.8 percent.

Among gateway markets, only San Francisco posted a higher rate, reaching 28.8 percent. Miami (15.2 percent) and Los Angeles (16.0 percent) were at the opposite end.

In one of the largest office leases in the area in recent years, Pokémon signed a 374,000-square-foot lease at Skanska’s The Eight, a 26-story mixed-use development in Bellevue, Wash. The building totals about 729,000 square feet, out of which 541,000 are destined for office use.

In June, TikTok decided to expand its office presence in the market and signed an additional 150,000-square-foot lease in downtown Bellevue, Wash. The tenant will occupy seven floors at Kemper Development’s Lincoln Square North Tower, where it had already committed to 132,000 square feet across six floors in January.

Coworking sector remains on par with national trends

As of December, Seattle’s coworking sector consisted of more than 3 million square feet, accounting for 1.9 percent of the market’s office stock. Among gateway metros, only Boston (1.8 percent) and Washington, D.C. (1.6 percent) had a smaller percentage of shared space out of total inventory, while Miami (3.8 percent) took the spotlight.

In the first quarter of last year, CENTRL Office took over the former WeWork shared space at the Kelly-Springfield Building in Seattle. The firm will operate the 53,365-square-foot space under a management contract with landlord Legacy Cos., after WeWork vacated the offices in February, filing for Chapter 11 bankruptcy.

Regus (445,380 square feet) became the largest flex office provider in the Emerald City as of December, followed by WeWork with 339,476 square feet. These operators were followed by extraSlice (296,437 square feet) and Industrious (189,675 square feet).

The post Seattle Office Maintains Values, But Trades Are Few appeared first on Commercial Property Executive.

New York Life Real Estate Investors has sold 515 Post Oak, a 274,583-square-foot, Class A office building in Houston, to Dallas-based EY Ventures LLC. JLL worked on behalf of the seller and procured the buyer. 

New York Life REI came into possession of 515 Post Oak in 2022, according to CommercialEdge information. The previous owner, Spear Street Capital, had defaulted on the $44.5 million loan provided by the lender in 2019.

The property covers a 3-acre site at 515 Post Oak Blvd., east of Houston’s 610 West Loop. The location is also near interstates 10 and 69. Downtown Houston is some 8 miles east away.

Completed in the 1980s, the 12-story building has since undergone renovations worth more than $1 million. Improvements included upgrades to the fitness center, tenant lounge, onsite cafe, conference areas and parking. The mid-rise was awarded the LEED-Silver certification 10 times, most recently in 2023. 

The tenant roster features TopSpot, Greater Houston Community Foundation, Luxe Portfolio, Edge Realty Partners and Shale-Inland Holdings LLC. The building was 74 percent leased at the time of sale.

Senior Managing Director Jeff Hollinden and Managing Director Kevin McConn led the JLL Capital Markets Investment Sales and Advisory team representing the seller. 

Houston’s office investment volume reached $940 million year-to-date as of November 2024. Assets traded at $107 per square foot, below the national average of $179, a recent CommercialEdge report shows.

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On a global level, average net effective costs for prime office space rose by just 0.1 percent compared to the third quarter. The increase was driven by a 0.3 percent growth in gross rental rates and an uptick of 0.2 percent in fit-out costs, moderated by landlord concessions. Overall, the upward trend for the year stood at 1.9 percent.

With a net effective cost to occupier of $206.7 per square foot annually, Midtown Manhattan ranked third among the 35 global markets Savills covers, outpaced only by London’s West End ($277.5) and Hong Kong ($230.4).

The report also highlighted Los Angeles, with a spotlight on Century City. Savills reported that this submarket in particular saw a 5 percent net effective cost-to-occupier growth last quarter.

“With its collections of trophy assets and reputation for safety and extensive retail options, Century City represents one of the best-performing submarkets in Los Angeles,” Henry Gjestrum, JLL research manager in Los Angeles, told Commercial Property Executive.

Nearly 1.6 million square feet of leasing activity has taken place in Century City over the last 12 months, pushing forward the market’s recovery, he added.

Century City is the only market in Los Angeles that has an office tower under construction with a significant amount of preleasing. Office asking rents in this submarket are 81 percent higher than the rest of Los Angeles, according to Gjestrum.

Trophy assets are leading the way in practically every other primary U.S. market, just like in Century City, Jim Schoolfield, managing director at JLL in Los Angeles, told CPE.

“Century City benefits from most tenants being in professional services space where the return to office mandates have been highest,” Schoolfield said.

READ ALSO: Top 100 Office Leases of 2024 Point to Stabilization

Landlords have heavily invested in creating world-class amenities to attract the premier tenants, he added. “Rent growth has been 4 percent from the fourth quarter of 2023 to the fourth quarter of 2024, and the average asking rate is $7.58 per square foot for Class A space, which far outpaces the rest of Los Angeles.”

According to Schoolfield, among the top nine assets in Century City, only 20 full floors are available directly, with a vacancy of 11.4 percent.

“To deal with competing demand, the larger tenants must transact at least 24 months before any lease commencement,” Schoolfield said.

Century City, an outlier

Los Angeles—specifically Century City—is an outlier, according to Eric Segal, MAI, senior managing director of Integra Realty Resources’ Los Angeles office.

“Our data supports the trend highlighted by Savills,” he told CPE. “Century City recorded some of the strongest leasing volumes since early 2020, with intense demand for premium office space driving effective rents higher. This underscores a broader pattern where top-tier assets in key locations thrive, while much of the office sector is still working toward stability.”

Speaking nationally, Segal said the U.S. office market is experiencing a sharp divide.

“While top-tier office buildings in select markets are holding steady or even seeing rental growth, the broader sector continues to struggle with high vacancies and evolving tenant needs,” he said. “The ‘flight to quality’ is real, but it’s happening alongside persistent challenges for aging, outdated office stock that lacks the amenities and flexibility today’s tenants require.”

Miami, New York City lead the way

Nowhere is demand for prime space more evident than in Miami, according to Tere Blanca, founder & CEO of Blanca Commercial Real Estate.

“Demand has been fueled by new-to-market tenants and a growing existing tenant base, sending asking rents skyrocketing,” she told CPE.

In prime (Tier I) CBD properties, asking rates have increased 7.2 percent year-over-year and an astonishing 67.8 percent since the end of 2019, Blanca added. In Brickell, where the only new supply delivered fully leased, prime asking rates have increased by 82 percent since the end of 2019.

“With no new supply expected in the CBD until the end of the decade, we expect owners to continue to mark to market vacant spaces and renew tenants. This will continue to drive healthy rate increases across the CBD market,” Blanca said.

The office sector appears to have bottomed out, with early signs of renewed transaction activity, according to Eli Randel, chief operating officer of Crexi.

“Blackstone’s recent high-profile acquisition in Manhattan suggests the worst may be behind us,” Randel said. “The divide between winners and losers remains stark—amenity-rich, Class A properties continue to attract strong occupancy, while much of the Class C inventory is increasingly becoming obsolete.”

As for national office traffic numbers, Placer.ai reported that nationwide office visits were 40.2 percent lower during January than in January 2019, likely due to a mid-week New Year’s holiday and a polar vortex making travel difficult in many cities.

New York City led for visit recoveries last month, with visits down only 19 percent compared to January 2019. San Francisco ranked last among the cities analyzed, with visits down almost 52 percent.

The rising demand for prime office space is primarily driven by the push for a return to the office, according to Kenneth Salzman, executive managing director & principal at Lee & Associates NYC.

“Many companies’ return-to-office initiatives include offering onsite amenities and securing office locations in desirable areas that address employee conveniences and reduce commute times,” Salzman said. “Midtown Manhattan is a prominent submarket for office space due to its central location, easy access and neighborhood amenities.”

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Alexandria Real Estate Equities, Uber Technologies and basketball team Golden State Warriors have secured a $500 million refinancing loan for two office buildings in San Francisco that serve as Uber’s headquarters. The trophy duo encompasses 586,208 square feet in the Mission Bay neighborhood.

Goldman Sachs and Barclays provided the five-year, fixed-rate, single-asset, single-borrower CMBS note in a deal arranged by CBRE. To secure the loan, the joint venture made a down payment of $100 million on the existing debt, a $600 million financing package originated by JPMorgan Chase & Co. in 2020, public records show. Wells Fargo served as trustee.

READ ALSO: San Francisco Office Construction Rebounds Amid High Vacancy

Uber and Warriors each have a 45 percent stake in the two office buildings, while Alexandria owns the remaining 10 percent. The duo is at 1655 and 1725 Third St., next to the Chase Center arena and about 3 miles south of downtown San Francisco.

Completed in 2021, the 11-story buildings feature 45,911-square-foot floorplates, as well as LEED Gold certifications. Amenities consist of a café, a smoothie bar, as well as landscaped roof decks, to name a few.

Rounding up Uber’s Mission Bay campus are the office assets at 1455 and 1515 Third St., which measure a combined 486,600 square feet and bring the property’s total square footage to 1 million. Uber subleased these buildings to OpenAI in 2023.

CBRE Executive Vice Presidents Brad Zampa and Michael L. Walker arranged the financing on behalf of the venture. According to the firm’s research, the non-agency loan closings for banks rose to 43 percent in December, up from the 18 percent registered in September.

San Francisco’s office market sees better days

San Francisco’s office scene sees signs of improvement. Although the market’s vacancy rate rose 240 basis points year-over-year, landing at 34.2 percent in December, the last quarter of 2024 marked the first three-month period of positive absorption recorded since 2019, according to a report by Cushman & Wakefield.

This shift toward 2024’s tail-end spurred lending revival in the metro. In January, a joint venture between Bain Capital Real Estate and Phase 3 Real Estate Partners Inc. obtained $484 million to refinance a three-building life science complex totaling 566,661 square feet in Brisbane, Calif.

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Nearly two years after acquiring Aveva Drug Delivery Systems, DifGen Pharmaceuticals has relocated its corporate headquarters from Princeton, N.J., to Miramar Park of Commerce in Miramar, Fla. The combined company now occupies 166,794 square feet across three locations within the 600-acre office and industrial campus in Broward County.

One of the park’s prominent health-care tenants since 1994, Aveva had initially occupied 44,450 square feet. The company expanded its footprint to a total of 125,294 square feet before DifGen’s relocation to 3200 Commerce Way.

READ ALSO: Top 100 Office Leases of 2024 Point to Stabilization

Sunbeam Properties & Development, the developer and owner of the park, broke ground on Miramar Park of Commerce in 1984. It is the largest locally owned and managed business campus in South Florida, with more than 5 million square feet of office/service, laboratory, pharmacy, light manufacturing and distribution space. More than 1.1 million square feet are leased by north of 30 top health-care-related tenants, creating a health-care hub that continues to strengthen the regional economy and business environment.

“We are focused on offering flexible management and innovative leasing solutions to build long-term partnerships with our tenants that foster their growth and success,” Peter “PJ” Apol, director of leasing and marketing for Sunbeam Properties & Development, told Commercial Property Executive.

Apol and Ryan Goggins, vice president of acquisitions, leasing and marketing at Sunbeam Properties & Development, represented the owner in the lease transaction.

A thought-after business campus

DifGen isn’t the only company moving its headquarters to Miramar Park of Commerce. In November, VSE Corp., a provider of aftermarket distribution and repair services for the aviation industry, said it was relocating its corporate headquarters from Northern Virginia. VSE, previously known as 1st Choice Aerospace, first moved to the campus in 2014, leasing 37,473 square feet. The company now occupies 142,861 square feet at the property.

In October, Sunbeam Properties & Development announced more than 92,000 square feet of new leases and expansions at the park. Memorial Healthcare System expanded by 26,546 square feet for a total footprint of more than 200,000 square feet for uses including administrative offices, training, pharmaceutical, IT and pathology.

SIMTEC Silicone Parts added 39,670 square feet for a total of 87,540 square feet and Sunshine Avionics and its affiliates added 14,617 square feet for a footprint of more than 38,000 square feet at multiple buildings. In a new lease, Kids SPOT Rehab took 12,052 square feet for a headquarters and administrative office.

Growing in the market

Apol told CPE Park Miramar, a new 126-acre mixed-use development the company is building next to the office and industrial park, is “generating a lot of excitement and interest in the market.”

Sunbeam Properties & Development received rezoning and site plan approval from the Miramar City Commission in November to move ahead with the project, which had been in the planning stages for about two years. Park Miramar will include more than 2,800 apartments, a 185-key hotel, 340,000 square feet of retail and restaurant space with a grocery store and 128,000 square feet of office space.

The post Miami-Area Commerce Park Gets New Pharma HQ appeared first on Commercial Property Executive.

Hines, which serves as the 1.2 million-square-foot building’s asset manager and property manager, also participated in the deal, the funding of which was led by Wells Fargo, Bank of America and Bank of Montreal.

The building currently is 97.2 percent leased, with tenants including Salesforce, Stifel, Dechert LLP, US Bank, Lloyds Bank and Standard Chartered.

Ivanhoé Cambridge acquired 3 Bryant Park from EQ Office for $2.2 billion in early 2015, according to information provided by CommercialEdge. The building was completed in 1972.

READ ALSO: Top 100 Office Leases of 2024 Point to Stabilization

Ownership reportedly has been making ongoing capital investment since acquiring the property. Amenities include direct access to Bryant Park, on-site retail anchored by Whole Foods and Equinox, an outdoor plaza of more than 16,000 square feet, a new conference center, a sky lobby with a coffee bar and immediate access to the 42nd Street Subway station, serving the B, D, F, M and 7 lines. The property also features an array of dining options including Valbella, Shake Shack and Rosetta Bakery.

The JLL Capital Markets Debt Advisory team who represented the borrower was led by Senior Managing Directors Christopher Peck and Drew Isaacson, Managing Director Lauren Kaufman and Directors Jennifer Zelko and Christopher Pratt.

More demand for big bucks

Based on its location equidistant from multiple transit hubs, including Grand Central Terminal, Penn Station and the Port Authority Bus Terminal, the Bryant Park micro-market is one of New York City’s strongest office submarkets, JLL stated. Its current 0.8 percent vacancy for trophy assets compares favorably with other submarkets, and its rents are running about 50 percent higher than the average for Midtown Class A properties.

More broadly, with respect to the capital markets, JLL commented that current trends “indicate increasing liquidity for large office loans, buoyed by ample debt capital and increased confidence in the sector.”

To put that in numbers, since the third quarter of 2024, JLL has seen a significant surge in demand for large commercial real estate loans. That’s part of a nearly 30 percent rise in lender quotes for deals exceeding $100 million in the second half of 2024, versus the same period in 2023.

This past August, Yeshiva University signed a 32-year lease expanding its presence at Herald Center, in Midtown, to 160,000 square feet. The Class A property is owned by JEMB Realty, which represented itself in the lease negotiations; the university was represented by Savills.

Yeshiva University intends to use the additional space at Herald Center to expand its presence in the health sciences, such as occupational therapy and speech-language pathology.

The post Ivanhoé Cambridge Lands $1.1B Refi for Manhattan Tower appeared first on Commercial Property Executive.

Commercial property insurance company FM Global has signed a 32,000-square-foot office lease at 1906 Reston Metro Plaza in Reston, Va.

Owned by Comstock Holding Cos., the 150,000-square-foot tower is part of the three-building Reston Metro Plaza complex, part of the larger mixed-use Reston Station development.

FM Global joins other tenants such as Qualtrics and Neustar, the latter having signed the 100,000-square-foot lease with Comstock in 2019. Google, Spotify and ICF International also have established headquarters at the Metro Plaza district.

The office complex has access to the Wiehle-Reston East Station, on Metro’s Silver Line. Dulles International Airport is some 8 miles away, while Washington, D.C. is 20 miles southeast.

READ ALSO: Top 100 Office Leases of 2024 Point to Stabilization

As of December, office vacancy in the metro clocked in at 18.5 percent, 60 basis points higher over a 12-month period, a recent CommercialEdge report shows, but was below the 19.8 percent national average rate.

The Reston Metro Plaza office complex

Comstock Holdings Cos. completed the office towers in 2020. A year later, the company secured $350 million in refinancing from Blackstone and DivcoWest.

The 15-story, 150,000-square-foot 1906 Reston Metro Plaza has a LEED Silver certification and is the second office building of the three developments. Designed by architect Helmut Jahn, the 365,000-square-foot 1900 Reston Metro Plaza is the first of the three office towers and features the Spaces. coworking location. The third building is the 1902 Reston Metro Plaza which encompasses 250,000 square feet.

Apart from its office complex, the 90-acre Reston Station also includes residential units, dining and retail spaces. The development is one of the largest mixed-use properties in the Mid-Atlantic region. The ownership plans to deliver this year 500 more residential units and a JW Marriott Hotel & Residences.

The post Comstock Inks 35 KSF Lease at DC-Area Tower appeared first on Commercial Property Executive.

As vacancy rates climbed, loan delinquencies rose, and property values dropped through the year, landlords have increasingly been disposing of their underperforming office assets. Other alternative solutions, such as repositioning or converting, continue to remain popular choices.

Slow construction activity

As of December, D.C.’s office pipeline comprised 1.1 million square feet of space across seven properties, representing 0.3 percent of existing stock—below the national average of 0.8 percent. Among gateway markets, Boston led with 3.4 percent, followed by San Francisco’s 2.3 percent. When adding projects in the planning stages, the figure reached 3.1 percent—exceeding the national average of 2.9 percent and outperforming Chicago’s 2 percent, as well as Manhattan’s and Los Angeles’ 3 percent.

By comparison, at the end of 2023, a total of 3.5 million square feet of office space was under construction in D.C. In December 2024, Boston was the gateway city with the largest under-construction stock (8.7 million square feet), followed by San Francisco (3.8 million square feet). Only Chicago’s pipeline was smaller than the U.S. capital’s, with 870,344 square feet underway.

The largest office project currently underway remains the 420,000-square-foot 600 Fifth St. NW. Developed by Rockefeller Group and Stonebridge, the $375 million development topped out in May, with completion expected by 2026.

Construction starts included 964,674 square feet across three properties, accounting for 0.2 percent of existing stock, while developers completed 2.4 million square feet across 11 properties, representing 0.6 percent of total stock. Among significant completions in D.C. is Dulles Discovery 5, a 514,000-square-foot office building completed in early 2024 in Herndon, Va. Developed by Peterson Cos., the property is within the company’s Dulles Discovery, a 2.4 million-square-foot mission-critical development.

D.C.’s sales volume second in the nation

At the end of 2024, the metro’s office transactions totaled $2.6 billion, with 104 properties comprising 12.3 million square feet changing hands. Last year’s investment volume rose 19.8 percent year-over-year, propelling the metro to second place among gateway markets, behind Manhattan’s $3.9 billion.

The first quarter of last year was the busiest in terms of deals, ending with $947.4 million trading, point after which the sales volume decreased until December. Despite this downward trend, Washington, D.C.’s investment activity in 2024 picked up, compared to 2023, when 9.9 million square feet traded for $1.9 billion.

Significant transactions include CoStar Group’s $373 million acquisition of CEB Tower at Central place, a 560,000-square-foot office building in Arlington, Va. A joint venture between PGIM Real Estate and JBG Smith sold the Class A+ property at 1201 Wilson Blvd. in February.

Another notable deal was MRP Realty’s $225.7 million purchase of Gallery Place at 616 H. St. NW, a 297,002-square-foot property in D.C.’s Seventh Street Corridor submarket. In joint venture with Global Fund Investments, MRP bought the asset after its previous owner defaulted on a $179 million loan backed by the mid-rise building.

Office properties traded at an average sale price of $211 per square foot—above the national figure of $175 per square foot. Across similar markets, Miami emerged as the priciest metro, with $400 per square foot, while the lowest sale prices were recorded in Chicago ($85 per square foot).

Vacancy rate continued to climb

Washington, D.C.’s office vacancy rate clocked in at 18.5 percent as of December—slightly below the national figure of 19.8 percent and marking a 60-basis-point increase year-over-year. The metro’s rate was higher than in Miami (15 percent), Manhattan (16.6 percent) and Boston (17 percent). The highest vacancy rate was recorded in San Francisco, at 28.8 percent.

Significant leases in 2024 include Washington Post’s 300,000-square-foot extension at One Franklin Square. The property totals 612,189 square feet and is owned by Hines and General Motors Pension Fund.

Additionally, Fannie Mae signed a long-term commitment of 340,000 square feet at Midtown Center in downtown D.C. Carr Properties and IGIS Asset Management are the owners of the 867,000-square-foot building.

High potential for office-to-residential makeovers

As vacancies increased in most markets, office-to-residential conversions remained an attractive option for property owners. CommercialEdge launched the Conversion Feasibility Index, a new tool that highlights markets with strong office-to-residential repositioning potential, using a set of property-level scores. Powered by Yardi, the CFI score has three tiers, with Tier I assets being the most suitable candidates.

Washington, D.C. has 72 properties totaling 6.4 million square feet in the Tier I category. Additionally, there are 421 office buildings in the Tier II category, totaling approximately 53.8 million square feet.

Developer Penzance has filed plans for an office-to-residential conversion that includes two buildings in Arlington, Va., within the Rosslyn submarket. The pair of properties are at 1901 N. Fort Myer Drive and at 1911 N. Fort Myer Drive and total 249,684 square feet. The proposed project is set to include two residential towers with 862 apartment units and a condominium tower with 82 units. The 1960s buildings hold CFI scores of 95 and 91 points, respectively.

Coworking gains ground at affordable rates

Washington, D.C.’s coworking sector comprised 6.4 million square feet across 277 locations as of December. Manhattan was the gateway market with the largest flex office footprint (11.3 million square feet), while D.C. outperformed Boston’s 4.9 million square feet. The metro continued to emerge as a hotspot for virtual office providers due to its affordable rates, which last year dropped as low as $80 per month, according to CoworkingCafe.

The metro’s share of flex space as percentage of total leasable office space reached 1.6 percent—lower than the national average of 1.9 percent and than its peer markets. Miami led the ranking with a 3.8 percent figure.

WeWork was the flex office provider with the largest footprint in D.C., with locations totaling 566,182 square feet. The company was followed by Regus (528,779 square feet), Industrious (508,332 square feet, Spaces (453,864 square feet) and Local Works (400,997 square feet).

The post DC Office Investment Picked Up Steam in 2024 appeared first on Commercial Property Executive.

The survey also found that renewals accounted for 68 percent of the new agreements, marking a 10 percent increase compared to 2023.

The report also showed that more than 50 percent of renewing tenants maintained their existing footprint, and nearly one-third expanded. Three-quarters of those who moved out expanded their space with preference to Class A “trophy” space.

Technology companies led the list with 29 of the largest leases, followed by finance & insurance at 15.

“The rise of GenAI technology and implementations in businesses have been a driver of newly leased space as either new startups pop up or existing firms expand to develop these capabilities,” Ermengarde Jabir, Moody’s Director of Economic Research, told Commercial Property Executive.

For example, in San Francisco, arguably one of the most impacted office markets during the current cycle, a fair amount of recent absorption has been related to the need for office space associated with AI endeavors, she said.

Those relocating gave the nod to “vibrant mixed-use” districts, defined as having a dense population, closeness to retail, dining and culture and prime office buildings.

The Northeast (42 percent) and Pacific (17 percent) regions held the greatest amount of square footage on the list. On a market level, Manhattan dominated, securing the largest share of the top 100 leases by a substantial margin, with 24 large leases signed.

More space enhances productivity

“While the office leasing market has been in a downturn for several years amid shifting workplace strategies and elevated vacancy rates, several sectors continue to display resilience and even expansion,” Nick Schlanger, director of research services at NAI Hiffman, told CPE.

Growth among professional services, life science and tech firms has been a key driver of large lease transactions, as these industries maintain a strong need for high-quality office environments, Schlanger observed.

“Across these sectors, the push toward premium office space reflects a broader shift: rather than leasing just for capacity, companies are securing space that enhances productivity, aligns with corporate culture, and provides a competitive edge in recruitment and retention.”

Schlanger said that in two of the largest office leases in the Greater Chicago area last year, Medline Industries expanded its footprint in both the CBD and the suburbs.

The medical supply giant signed a long-term lease for an additional 110,000 square feet at the Merchandise Mart, bringing its total space there to 161,000 square feet. Simultaneously, Medline secured a 214,560-square-foot lease at 2375 Waterview Drive in Northbrook, marking the largest new suburban office lease since 2022.

“Medline’s expansion highlights the resilience of health-care and life sciences firms, which continue to grow their office presence even as other sectors recalibrate. These companies prioritize high-quality space to support corporate operations, innovation and workforce needs, reinforcing their role as key drivers in today’s office market.”

Altered remote policies have an impact

“We are firm believers in urban office space and have seen a dramatic uptick in activity in early 2025,” James Grady, senior vice president of leasing for Synergy, told CPE.

Synergy is one of Massachusetts’s largest and most active commercial landlords, and it owns a significant number of downtown Boston office buildings.

READ ALSO: Which Asset Classes Stole the Spotlight in 2024?

“We have witnessed a noticeable surge in office leasing activity, not just in the broader market but also across Synergy’s significant portfolio. As more and more companies continue to alter their remote work policies, we anticipate this momentum will only grow.”

There is increased collaboration between landlords and tenants, as both sides work together to create office environments with on-site amenities that support these evolving policies, he added.

B and C products not seeing the pop

David Curry, partner at Farrell Fritz, P.C., said he is seeing a similar trend at the higher end of the office market, which is not translating to the lesser B and C products.

“The vast majority of these spaces are in top Class A office buildings,” Curry told CPE. “Class A office remains a desired commodity despite the generally flat overall performance of office.”

According to Curry, businesses remain willing to spend record rents on full-service, high-end spaces their employees want to come to, and their clients are impressed by.

These spaces offer amenities such as dining options, fitness centers and other recreational spaces. They are typically newer buildings with open floorplans and more natural light, which enhances the work experience and fosters collaboration. “Such Class A amenities offer these companies a leg up to recruit the best and brightest talent,” he said.

READ ALSO: What’s Defining Office in 2025?

Curry added there has also been an increasing “mandate” to return to office in the years since the COVID-19 pandemic.

“Many companies believe that productivity, collaboration and comradery among its staff suffer the more their employees are permitted to work remotely,” he said. “A growing number of large and influential Class A tenants are requiring their workforce to return to the office by increasing their ratio of in-person workdays to remote workdays or eliminating the ability to work remotely entirely. This shift in policy requires additional square footage.”

Curry said this trend is likely a sign that these top companies are thriving and expanding their workforces, requiring more space, which is a welcome economic indicator.

Larger office spaces can fill that expansion and/or consolidate operations that may be spread among multiple locations. These consolidations can be meaningful ways to cut overhead costs and increase efficiency.

The post Top 100 Office Leases of 2024 Point to Stabilization appeared first on Commercial Property Executive.

An affiliate of Melrose Solomon Enterprises has acquired Tavern Square, a 171,738-square-foot office building in Alexandria, Va.

The property traded for $38.9 million, Washington Business Journal reported. Westport Capital Partners previously owned the asset, according to CommercialEdge information.

JLL Capital Markets worked on behalf of the seller and procured the buyer.

Tavern Square had been under Westport Capital Partners’ ownership since 2018, when the company purchased the property from The Pyne Cos. for $50.4 million, the same source shows.

READ ALSO: What’s Defining Office in 2025?

Tavern Square occupies an entire city block, enclosing 421 King, 123 N. Pitt, and 110 and 132 N. Royal St., in Old Town Alexandria and some 8 miles from Washington, D.C. The low-rise is also across the street from Courthouse Square, a 120,031-square-foot office building Melrose Solomon Enterprises bought in 2023.

The office national vacancy surged last year and despite some predictions for an uptick in sales volume, the prices are expected to stagnate, a recent CommercialEdge report shows. An initiative such as D.C.’s Office-to-Anything initiative aim to encourage adaptive reuse, with growing interest in converting offices to data centers, industrial spaces and coworking hubs alongside residential projects.

Fully renovated office building

Built in 1967, Tavern Square underwent a full renovation in 2019, adding new features such as a fitness center and a conference center with tenant lounge. The five-story office building includes approximately 40,000 square feet of ground floor retail space, six passenger elevators and 330 car parking spots.

The property has 23 tenants, including CB Design Group, MODE4 Architecture and Johnson/Citronberg, among others, CommercialEdge shows. The asset was 84 percent leased at the time of the sale.

The JLL Capital Markets team included Senior Managing Director Matt Nicholson, Directors Kevin Byrd and Daniel Naughton, Senior Managing Directors Andrew Weir and Jim Meisel, Senior Director Dave Baker, and Managing Directors Jordan Lex and Dean Sands.

The post Melrose Solomon Pays $39M for DC-Area Office Building appeared first on Commercial Property Executive.

Pinkard’s 2 million square feet of office, flex/office, warehouse/industrial and retail space in the Maryland region have been added to MCB’s nationwide portfolio of operating assets totaling about 15 million square feet.

Pinkard co-founder Katharine Pinkard has been named senior managing director of property management for MCB Real Estate. MCB noted that its current property management division leader, Marty Lastner, recently announced plans to retire.

The acquisition boosts the number of MCB personnel in asset and property management from about 36 to about 50, an MCB spokesperson told Commercial Property Executive.

READ ALSO: CRE Compensation, Hiring Trends

MCB noted that it has in recent months acquired several varied assets that are widely separated geographically.

For example, this past September the company purchased a 368,000-square-foot Class A industrial facility in Howell Township, N.J., for $69.9 million. The seller of the newly completed Howell 1 was Active Acquisitions. MCB also signed a 15-year, full-building lease with a third-party logistics company.

The same month, a joint venture of MCB and a fund managed by DRA Advisors acquired Falcon Ridge Town Center, a fully leased 273,424-square-foot retail center in Fontana, Calif., for $64.7 million.

Given this steady growth, MCB President Gina Baker Chambers emphasized in a prepared statement the Pinkard acquisition’s importance in beefing up the company’s internal team.

Last June, Baker Chambers spoke at length with CPE about the challenges of development projects that are financially sound, environmentally sustainable and responsive to community needs.

Family history

Interestingly, the acquisition represents a kind of marriage between notable families with a historical connection. The Pinkard tradition began in 1922 with one W.C. Pinkard, whose grandson Walter Pinkard Jr. was in charge by the 1970s. Katherine Pinkard and her father, Greg Pinkard, founded Pinkard Properties in 2012, continuing the multi-generational tradition.

But here’s the twist. One of Greg’s brothers, Peter Pinkard, in 2007 was a co-founder of MCB Real Estate; he remains there as a managing partner.

Pinkard Properties’ Greg Pinkard meanwhile will serve MCB Real Estate in an advisory role.

Jarnell Swecker, managing director/marketing at MCB Real Estate, told CPE that while there hasn’t been any formal collaboration between the two companies (until now), “Baltimore is a close-knit market where everyone knows everyone … and Pinkard Partners, with their breadth of experience, matched up as the perfect partner for what MCB wanted to accomplish.”

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An affiliate of Northside Hospital has purchased Glenridge Point, a 184,912-square-foot office complex in Sandy Springs, Ga. Richmond Honan Development & Acquisitions sold the two-building property for $14.2 million, according to CommercialEdge information.

Colliers Senior Vice President Tom Davenport and Vice President Dany Koe worked on behalf of the receiver, B. Riley Advisory Services.

The office complex last traded in 2018, when Richmond Honan acquired the asset for $44.5 million in a portfolio transaction from Pope & Land Enterprises, the same source shows.

Office complex on Pill Hill

Located at 100 & 200 Glenridge Point Parkway, the property is at the intersection of Interstate 285 and Georgia Highway 400. The office complex is nearby the Pill Hill medical hub and some 14 miles from downtown Atlanta.

Completed in 1970 on 3.6 acres, the five-story Glenridge Point incorporates floorplates ranging between 18,417 and 18,771 square feet, four passenger elevators and a total of 670 car parking spaces. The low-rise property underwent renovations between 1999 and 2016. Amenities feature outdoor space with seating area and EV parking spots.

The tenant roster includes eVestment and Keller Williams Realty First Atlanta, among others, according to CommercialEdge.

In the last quarter of 2024, office sales in the U.S. totaled $9.1 billion across 365 transactions, covering 46.9 million square feet. This marks a significant decline compared to the previous quarter, with a 37.1 percent drop in sales count and a 25.3 percent decrease in square footage.

Year-over-year comparisons also show a decline in office investment activity, with the last quarter of 2023 ending with $11.2 billion across 612 office sales.

The post Atlanta Office Complex Trades for $14M appeared first on Commercial Property Executive.

Law firm Freshfields has signed a 117,000-square-foot, long-term lease at Midtown Center in Washington, D.C. Carr Properties owns the 869,000-square-foot, two-building office complex. CBRE brokered the deal on behalf of both parties, while Carr Properties also had in-house representation.

Freshfields will occupy floors six through eight at the property’s West Tower, more than doubling its presence in the metro.

The firm will relocate from 700 13th St., N.W., an almost 244,000-square-foot office building where the company has been located since 2014. The leased space at that property comprised 52,000 square feet, according to the Washington Business Journal.

READ ALSO: What’s Defining Office in 2025?

Midtown Center is now more than 80 percent leased. The roster also includes Fannie Mae, which downsized its headquarters from 713,500 square feet to 340,000 square feet in August.

The 14-story property is at 1100 15th St., N.W., in downtown Washington, D.C., four blocks north of The White House. Ronald Reagan Washington National Airport is 4 miles southwest.

Midtown Center, up close

Carr Properties completed Midtown Center in 2017, using funds from a $525 million construction loan from Wells Fargo Bank, CommercialEdge shows. In 2021, the company sold a 49 percent stake in the asset to IGIS Asset Management, in a deal that valued the asset at $980 million.

The Class A property consists of two LEED Gold-certified buildings connected by three pedestrian bridges. Features include floorplates averaging 75,500 square feet, 16 passenger elevators and a 45,000-square-foot retail plaza.

Amenities include a fitness center, yoga room, rooftop terrace and bike room. The owner plans to add new amenities to the buildings, including conference and entertainment centers, as well as a rooftop penthouse.

CBRE Executive Vice President Amy Bowser and Senior Vice Presidents Brooks Brown and Harry Stephens, along with Vice Chair Rob Copito, arranged the lease. Carr Properties’ in-house representation comprised Senior Vice President Kaitlyn Rausse and Director Ryan Lopez.

D.C.’s office vacancy sees minor change

Washington, D.C.’s office vacancy rate clocked in at 18.5 percent at the end of December, 60 basis points higher year-over-year, but still below the 19.8 percent national average, the latest CommercialEdge office report shows. The metro’s listing rate during the same period was $41.4, marking a 1.8 percent increase compared to December 2023.

A few months ago, ArentFox Schiff signed a roughly 120,000-square-foot lease also at Midtown Center. The firm will relocate its headquarters to the property in early 2028.

The post Carr Properties Lands 117 KSF Lease in Downtown DC appeared first on Commercial Property Executive.

The redevelopment is being financed by the United Nations Development Corp., a public benefit corporation founded in 1968, which will issue as much as $380 million in bonds for the project. Goldman Sachs and Siebert Williams Shank will be the underwriters for the financing.

The plan calls for a number of top-to-bottom building renovations, overseen by architectural firm Spacesmith, whose other projects include the U.S. embassies in Mexico City, Turkey and Indonesia, a number of consulates, the Staten Island Family Justice Center and the Queens Flushing Library, just among its civic designs. The scope of the UN Plaza project will be about 900,000 square feet.

Cushman & Wakefield manages the asset and is spearheading construction management of the renovation through its Project & Development Services team.

Cosentini Associates has been tasked for the mechanical, electrical and plumbing work, with Turner Construction Co. as the overall construction manager, which inked a Project Labor Agreement with the Building and Construction Trades Council. Work is slated to begin sometime in the second quarter and conclude in about two years.

New York City Mayor Eric Adams made the announcement, asserting that the plan would create about 18,000 jobs. As an employer, the UN is already one of New York City’s major ones, employing about 20,000 people, mostly in office positions.

READ ALSO: When Office Meets Hospitality

Besides cosmetic upgrades, the buildings will receive up-to-date energy efficiency systems under the aegis of the state’s BuildSmart 2025 initiative, whose goal is to achieve 11 trillion BTU of energy savings at state facilities this year. By way of comparison, total energy production in the entire state (in 2022) was 512 million BTU, according to the U.S. Energy Information Administration.

Other renovations will be undertaken by tenants in their own space, and there will also be building-wide fire safety system upgrades, and changes to align the structures with updated disability codes and regulations. CBRE acted as advisor to UNDC in the project, and Newmark acted as advisor to the UN for the project.

A slice of history

Famed worldwide, the 1950s UN headquarters building was only the initial development in Manhattan’s Turtle Bay neighborhood. The 358,000-square-foot One UN Plaza and the 369,000-square-foot Two UN Plaza, which include office space but also a hotel on the top floors, along with Three UN Plaza, were developed to meet the needs of the UN as it grew during the 1970s and ’80s.

The redevelopment of One and Two UN Plaza, which are owned by the UNDC, will enable further consolidation of UN personnel, according to the mayor’s office. The United Nations Children’s Fund, which maintains its global headquarters at Three UN Plaza, will own the building in 2026.

NYC office market sees renewed strength

The announcement comes at a time when the New York office market is making something of a comeback from pandemic-era lows. Net absorption for 2024 came in at a negative 5.7 million square feet, though total leasing was 38.1 million square feet, a post-pandemic high, according to Newmark data.

Though still negative, the 2024 absorption represented a considerable improvement for the Manhattan office market, and closer to pre-pandemic levels, such as in 2016, when absorption was exactly the same, Newmark noted. In 2020, there was negative absorption of 20.8 million square feet of office on the island, and in 2021 that total had expanded to 23.6 million square feet.

Overall availability in the Manhattan office market was down 70 basis points quarter-over-quarter in the fourth quarter of 2024, Newmark reported, to 17.9 percent. In Midtown, which includes Turtle Bay, availability contracted much more quickly, down 350 basis points between the third and fourth quarters.

Newmark also reported that leasing activity in Midtown rose to 27.8 million square feet in 2024, the highest level since 2019, and 23 percent higher than the historical long-term average for that metric.

The post United Nations Buildings to Undergo $500M Makeover appeared first on Commercial Property Executive.

The non-profit organization Visit Phoenix has signed a 24,722-square-foot lease at RED Development’s mixed-use CityScape in Phoenix.

Visit Phoenix will relocate its offices from 400 E. Van Buren St., less than one mile from CityScape. The tenant will establish its headquarters at the new space and will move to the location in the fourth quarter of 2025.

JLL represented both parties in the lease negotiations.

The 1.2 million-square-foot property features a 27-story office tower, retail, dining and entertainment spaces, as well as the Kimpton Palomar hotel.

READ ALSO: Phoenix Office Market’s Small Wins Add Up

The office component’s tenant roster includes Alliance Bank, United Healthcare and Gust Rosenfeld and is currently at 6.0 percent vacancy, Phoenix Business Journal reported.

The office tower at CityScape

Located at 1 E. Washington St., the property is in downtown Phoenix, in the city’s central business district. Phoenix Sky Harbor International Airport is some 4 miles southeast.

The 641,718 rentable-square-foot office building came online in 2010 and features 23,600-square-foot floorplates and 33,000 square feet of retail space. Amenities include shared conference rooms, a fitness center and some 2,670 car parking spaces. In 2024, the high-rise became subject to a $170 million loan originated by Western Alliance Bank, according to CommercialEdge information.

JLL Executive Vice President Mike Gordon worked on behalf of Visit Phoenix in the lease negotiations, while Senior Managing Director Ryan Timpani and Senior Vice President Brett Thompson represented the ownership.

The office market in Phoenix had a vacancy rate of 19.4 percent as of December 2024, a 40-basis-point uptick over a 12-month period, but slightly lower than the national average of 19.8 percent, a recent CommercialEdge report shows. The metro’s asking rents reached $28.4 per square foot, up 2.7 percent year-over-year.

The post RED Development Inks Lease in Downtown Phoenix appeared first on Commercial Property Executive.

Community Healthcare Network has signed a 12,083-square-foot, long-term lease at 44 W. 28th St., a 192,000-square-foot office building in Manhattan’s Flatiron District.

Denham Wolf Real Estate Services worked on behalf of the tenant, while CBRE represented the landlord, Stellar Management.

CHN is one of the largest affordable community health care providers in New York City. The tenant will relocate its headquarters at the building’s fifth floor, with moving-in scheduled for this fall. Other tenants include J.T. Magen & Co., YellowHammer Media Group and Stellar Management, according to CommercialEdge information.

The current ownership picked up the asset in 2007, in a $51.5 million deal and in 2019, the property became subject to a $78 million refinancing package, originated by Flagstar Bank, the same source shows.

Completed in 1911, the 16-story building underwent cosmetic renovations in 2008 and features five passenger elevators, 12,000-square-foot floorplates and 9,000 square feet of first floor retail space.

The property is across from Madison Square Park and the 28th Street subway station. John F. Kennedy International Airport is some 15 miles southeast.

Director of Occupier Services Lauren Davis and Transactions Manager Cameron Tuttle with Denham Wolf Real Estate Services worked on behalf of the tenant. CBRE’s Senior Vice President Caroline Merck and Vice President Jacob Rosenthal represented Stellar Management during negotiations.

Manhattan’s low vacancy

The office sector is expected to continue to struggle in 2025 as it’s still adapting to the post-pandemic changes, a recent CommercialEdge report shows. Despite return-to-office policies from some companies, the national vacancy rate clocked in at 19.8 percent as of December last year, marking a 150-basis-point increase over a 12-month period. Office vacancies continued to grow throughout 2024, with the six of the top 25 key markets witnessing an increase by more than 500 basis points.

Nevertheless, Manhattan marked the lowest office vacancy rate in the Northeastern U.S., with 16.6 percent as of December, while also being ranked the fifth lowest on a national level. The borough’s asking rents reached $68.4 per square foot—the highest in the North region and the second-highest in the U.S., after San Francisco’s $70.6 per square foot.

One of the largest deals closed recently was the 147,543-square-foot lease signed by The Federal Deposit Insurance Corp. The government agency will fully occupy three floors, as well as a partial floor for the next 10 years at the 1.6 million-square-foot, 1166 Avenue of the Americas.

The post Stellar Management Lands HQ Lease in Manhattan appeared first on Commercial Property Executive.

Cypress Equities, a national real estate investment and development firm, is partnering with New Orleans-based Lauricella Land Co. on the office building at 1600 Convention Center Blvd. Located at the corner of Henderson and Euterpe streets, it will be the first vertical development to be started in the River District, a 39-acre mixed-used neighborhood adjacent to the New Orleans Ernest M. Morial Convention Center.

Shell Plaza is expected to be completed by September 2026. The building will consist of 117,941 square feet of Class A office space fully leased by Shell on floors five to eight. There will be parking on floors two to four and 6,407 square feet of ground-floor retail space. The building will feature column-free floorplates of about 30,000 square feet and include a 3,101-square-foot fitness center.

READ ALSO: Why the Metroburb Model Works

“At this point, the ground-floor retail is intended for a restaurant that will serve as a premiere dining destination for visitors to the River District and adjacent convention center as well as Shell employees and guests,” Chris Maguire, Cypress Equities CEO, told Commercial Property Executive. He said a restaurant tenant has not been announced.

Financing Shell Plaza

Capro Capital, a Las Vegas-based real estate private equity firm, is providing equity for the project. While Maguire declined to release details on the total project cost or financing package, a $74.5 million senior loan was originated by the Tannenbaum Capital Group Real Estate platform, a group of affiliated commercial real estate-focused debt funds focused on primary and secondary metropolitan areas of the Southern U.S.

Sunrise Realty Trust Inc. and Southern Realty Trust, both lenders on the TCG Real Estate platform, closed on a total of $64.5 million. SUNS, a Nasdaq-listed mortgage REIT and institutional commercial real estate lender, closed on a $44 million commitment to the $74.5 million senior loan. SRT, a private mortgage REIT which originates CRE debt investments and provides capital to high-quality borrowers and sponsors, closed on a $20 million commitment. The remainder of the loan was syndicated to an unidentified affiliated lending partner.

Building design highlights

Situated on a 1.6-acre parcel, Shell Plaza was designed by global architecture firm Gensler with a glass curtain wall that will complement the history and vibrant culture of New Orleans. The architecture incorporates elements inspired by the Mississippi River’s shipping industry and will feature metal panels and a palette of bronze, metal, glass and concrete. The building’s sustainable design, which includes LEED certification, will include expansive glass facades, a polycarbonate mesh screen for the parking podium and a rooftop garden with views of the river and downtown. There will also be green areas and public spaces on the lower level along with the retail space.

Employees and visitors to Shell Plaza will have expansive views of the Mississippi River and convenient walking access to downtown New Orleans and residential neighborhoods including the Garden District.

Broadmoor LLC is the general contractor and Integrated Logistical Support Inc. of New Orleans is the civil engineering firm for the Shell Plaza project.

Mixed-use district plans

River District Neighborhood Investors LLC is a group of mixed-use and residential developers selected in 2021 by the New Orleans Ernest N. Morial Convention Center Authority to develop a mixed-use community with sidewalks, bike paths and green spaces designed to revitalize the vacant land along the riverfront. Louis Lauricella, a managing member of Lauricella Land Co., a fourth-generation real estate development firm in New Orleans, is also manager of RDNI.

The largest nonindustrial/oil and gas project in Louisiana history, the River District is expected to generate $43 million of net new annual tax revenues and more than $1 billion in economic activity. In addition to Shell Plaza, plans call for condominiums and apartments, retail space, hotels, restaurants, sports and entertainment venues. Of the anticipated 900 multifamily units, 450 are to be affordable or workforce residences.

The post Shell HQ to Anchor $1B Mixed-Use Development appeared first on Commercial Property Executive.

FS Investments and Brandywine Realty Trust have entered a 16-year lease agreement for 117,000 square feet at 3025 JFK Blvd., a mixed-use tower within Philadelphia’s $3.5 billion Schuylkill Yards master-planned development.

The alternative asset manager is planning to relocate its global headquarters to the new space in early 2026. The company’s move from its current headquarters at Navy Yards will grow its footprint by 46 percent at 3025 JFK Blvd., where it has taken up four floors.

FS Investments has been in Philadelphia since its inception in 2007 and at Navy Yards since 2015. The company will bring its 300 local employees close to key transit connections at 30th Street Station, which is undergoing a large-scale restoration and renovation.

READ ALSO: What Defines the Best CRE Investments Today?

The 28-story mixed-use building at 3025 JFK Blvd. features 200,000 square feet of office space, a 29,000-square-foot indoor-outdoor amenity floor, 9,000 square feet of ground-floor retail and 18 floors of luxury residential. It also provides tenants and residents direct access to the newly expanded High Line Park.

Tactix Real Estate Advisors represented FS Investments in the transaction, according to The Real Deal. Last year, Goodwin Procter also signed a lease at the building, which is now 80 percent leased.

Schuylkill Yards’ progress

Last year, Brandywine Realty Trust and Drexel University topped out 3151 Market, a 435,000-square-foot 14-story life science building at Schuylkill Yards.

The tower at 3151 Market St. spans 14 acres in Philadelphia’s University City district. Offering 417,000 square feet of best-in-market lab and office space, 18,000 square feet of retail and amenity space, and 6,000 square feet of terrace space, it opened in 2024.

There are currently 65 office, life science and retail tenants at Schuylkill Yards. Upon completion at the end of the decade, the master-planned development is expected to total 6 million square feet of space across various property types.

Philadelphia’s office market performance

The prices for office space in Philadelphia decreased for the second half of 2024, according to CommercialEdge. Fundamentals did not improve over that time, with vacancy increasing by 510 basis points over the past 12-month period ending in October.

The muted supply pipeline had just 1.9 million square feet under construction. Four out of the five projects underway in October were life science assets, reinforcing the market’s emergence as a growing hub for the sector.

The post Brandywine Realty Secures Major Lease in Philadelphia appeared first on Commercial Property Executive.

Globe Life plans to move its corporate headquarters to 7677 Henneman Way in McKinney, Texas. The company intends to buy the 200,000-square-foot office building from SouthState Bank.

The deal also involves the purchase of two adjacent parcels of developable land—8 acres north of the building and 1.3 acres to the east.

Cushman & Wakefield represented both parties in the transaction. Bradley Arant Boult Cummings LLP also worked on behalf of Globe Life.

Globe Life will relocate its corporate offices from 3700 S. Stonebridge Drive, where it occupies roughly 150,000 square feet, according to CommercialEdge information. That building is some 4 miles north of the future headquarters where the firm will also gain exterior building signage rights.

The future Globe Life headquarters

KDC developed the six-story building at 7677 Henneman Way as the second component of Independent Financial’s headquarters. The development team also included Smith Group, Corgan and Kimley-Horn, among others. The bank was later on acquired by SouthState.

Completed in 2022, the low-rise has a LEED Silver certification. Amenities feature parking, a fitness center and conference space for 350 people, as well as food and beverage areas.

The property is 30 miles north of downtown Dallas and has access to the Sam Rayburn Tollway. Dallas-Fort Worth International Airport is some 27 miles away.

Cushman & Wakefield Executive Directors Campbell Puckett and Zach Bean, Executive Managing Directors Bill McClung, Chris Taylor and Ryan Hoopes, together with Associate Tucker Hume brokered the transaction. In addition, Senior Attorney Krishan Patel and Partner Lauren Smyth with Bradley Arant Boult Cummings LLP represented Globe Life.

The office investment volume may experience a modest increase in 2025, but prices are likely to remain steady, a recent CommercialEdge report shows. Maturing loans on properties facing occupancy issues and ongoing inflation pressures will lead to a market dominated by distressed property sales.

The post Globe Life Eyes New HQ Near Dallas appeared first on Commercial Property Executive.

The Miami office sector posted strong fundamentals throughout 2024, according to the latest CommercialEdge data. The metro marked a more than 41 percent jump in investment volume year-over-year, recording the busiest period in the last quarter.

Last year, high prices in the Magic City placed it fourth in the nation, the market also emerging as the most expensive gateway city for office deals, with assets trading at higher prices than even in Manhattan. Additionally, Miami’s end-of-2024 vacancy rate was the lowest in the U.S.

Significant projects boost Miami’s pipeline

As of December, the metro had 1.8 million square feet of space underway across 18 properties, accounting for 2.6 percent of existing stock—way above than the national average of 0.8 percent. Among gateway markets, Boston led the rankings with 3.4 percent, while Miami outperformed San Francisco (2.3 percent), Seattle (1.2 percent), Los Angeles (0.7 percent) and Washington, D.C. (0.3 percent). When adding projects in planning stages, Miami’s share reached 9.6 percent, second after Austin (12.6 percent).

The list of the largest projects under construction in the metro saw no changes as of December. Royal Caribbean’s new headquarters remains the largest development, scheduled to come online in early 2026. The 380,000-square-foot project is rising at 1050 Caribbean Way in Miami’s central business district.

The second-largest project underway is UHealth Medical Center at SoLé Mia, a 363,000-square-foot medical office development in North Miami. Turnberry and LeFrak Organization are the developers, with the completion date pushed to September 2025.

Projects that started going vertical last year added up to nearly 1.4 million square feet across 10 properties, representing 1.7 percent of the existing stock. Additionally, developers completed 1.2 million square feet across nine properties—accounting for 1.5 percent of total stock.

The largest office project underway for years, the 640,000-square-foot 830 Brickell tower by OKO Group and Cain International came online in October 2024. The project was the first Class A tower to be constructed in Miami’s urban core in more than a decade, and currently includes top-tier tenants such as Microsoft, Blackstone, WeWork and CI Financial Corp.

A top market for residential makeovers

Office-to-residential conversions emerged as an attractive option in recent years. As a response to this trend, CommercialEdge launched a tool that measures a building’s potential for residential conversion and highlights which markets post strong repurposing fundamentals. The Conversion Feasibility Index scores include three tiers, with Tier I properties being the most attractive candidates for such makeovers.

At the end of 2024, Miami had 21 office properties totaling nearly 2.9 million square feet within the Tier I category, while the Tier II included 138 buildings totaling 11.5 million square feet. The metro has a notable amount of office space posting high potential for residential conversions, with 3.7 percent of its office assets in Tier I and 12.4 percent in Tier II—emerging above the national averages 2.7 percent and 12.1 percent, respectively.

Ending the year as the priciest office market

Last year, Miami’s office sector saw in $1.4 billion in deals, with 46 properties totaling 3.5 million square feet changing hands—marking a 41.3 percent increase over the year. The volume reached $159.8 million at the end of the first quarter, while investment activity picked up during the second and third quarters. The last quarter ended with $668.7 million in deals—representing a 70.1 percent year-over-year growth.

In terms of total sales volume, Miami ranked fourth in the nation, after Los Angeles ($1.2 billion), while Manhattan led the rankings with $3.9 billion. The metro outperformed Chicago ($1.1 million), San Francisco ($786.6 million) and Seattle ($598.8 million).

Notable deals included the $443 million acquisition of 701 Brickell, a 685,215-square-foot high-rise. Nuveen Real Estate sold the 33-story property in one of the largest office transactions in Florida.

In 2024, Miami assets changed hands at an average sale price of $400 per square foot—above the national average of $175 per square foot. The Magic City emerged as the most expensive office metro in the nation, outpacing Manhattan ($369 per square foot), San Francisco ($350 per square foot) and Los Angeles ($281 per square foot). Chicago recorded the lowest figure among gateway markets, with an average sale price of $85 per square foot.

Mami’s vacancy rate lowest in the U.S.

Miami’s office vacancy rate stood at 15.2 percent as of December—below the national average of 19.8 percent and marking a 30-basis-point raise. The metro’s rate increased through 2024, from the 12.4 percent recorded in January.

The Magic City’s vacancy was the lowest across the nation. Miami was followed by Manhattan (16.6 percent), Boston (17 percent) and Chicago (18.8 percent), while San Francisco posted the highest U.S. rate at 28.8 percent.

Notable office leases that closed last year in Miami include DigitalBridge’s headquarters relocation agreement: a 79,141-square-foot deal in Delray Beach Fla. Later on, in September, MetLife Real Estate Management secured a 128,450-square-foot renewal at Wells Fargo Center in downtown Miami. The lease represented the largest office commitment in the city’s central business district in recent years.

Coworking share the highest in Miami

The coworking sector in Miami comprised approximately 3 million square feet across 144 locations as of December, slightly less than in Seattle (3 million square feet). Manhattan led the rankings with 11.3 million square feet, followed by Chicago (7.7 million square feet) and Los Angeles (6.5 million square feet).

Miami’s share of flex office space as percentage of total leasable office space reached 3.8 percent, the highest across gateway markets and above the national average of 1.9 percent. The coworking provider with the largest footprint in the metro remained Regus, with operations totaling 379,211 square feet. The companies that followed were WeWork (268,578 square feet), Spaces (226,223 square feet), Quest Workspaces (221,749 square feet) and Industrious (215,000 square feet).

In early December, Regus signed a 45,789-square-foot full-building lease in Miami Beach, Fla. The deal came after WeWork closed its location at Azora Exan’s 429 Lenox in May.

The post Miami’s Office Market Topped the Charts in 2024 appeared first on Commercial Property Executive.

The seller was Diversified Healthcare Trust, which reported that at the time of sale, the property was 49 percent leased, with a weighted average lease term of more than eight years. The seller stated that it plans to use the transaction proceeds to pay down its senior secured notes due in January 2026.

DHC is managed by leading U.S. alternative asset management company The RMR Group.

MUSE consists of three buildings totaling 186,000 square feet in the heart of Torrey Pines. The campus was recently repositioned with a new exterior glass façade and enhanced amenities, including a new fitness center, indoor/outdoor conference center, landscaping with outdoor seating and games, as well as a full-service café.

Two of the buildings were recently upgraded to modern labs and are fully leased on a long-term basis, Breakthrough stated. One vacant building will be repositioned to provide flexible wet lab space to accommodate a variety of life science research.

READ ALSO: The Most Active Life Science Markets in the US

As of press time, a Breakthrough Properties spokesperson had not replied to Commercial Property Executive’s request for additional information.

The Class A buildings are at 3030, 3040 and 3050 Science Park Road and are, respectively, three stories, 94,456 square feet, occupied by Surgalign; two stories, 36,418 square feet; and two stories, 55,102 square feet, tenanted by Prometheus Biosciences, according to information provided by CommercialEdge. All three were completed in 1985 and 1986 and completely redeveloped in 2021.

San Diego’s life science market performance

The San Diego life science market has seen direct vacancy rise steadily from a low of about 6 percent in mid-2022 to nearly 18 percent currently, according to a January report from Savills USA. Meanwhile, the construction pipeline has fallen to 4.5 million square feet, Savills reported, “as developers hold off on new projects amid limited preleasing and ongoing tepid demand.”

Torrey Pines and Sorrento Mesa have been the two most active submarkets for leasing activity recently.

In October, Breakthrough Properties opened Torrey Heights (renamed), a 520,000-square-foot life science campus in San Diego’s Del Mar Heights submarket. The 10-acre, three-building property is fully preleased, largely to Pfizer’s oncology division and Becton, Dickinson and Co.

The post Breakthrough Properties Buys Life Science Campus for $159M appeared first on Commercial Property Executive.

A joint venture between Cross Ocean Partners and Palisade Group has acquired 4500 Park Granada, a 222,667-square-foot office building in Calabasas, Calif. Gemdale USA sold the fully-leased asset for $69.4 million or about $312 per square foot, in a deal brokered by Newmark.

The property previously changed hands in 2021 for $79 million when it was acquired from Rising Realty Partners, according to CommercialEdge information. The asset currently traded at a 12 percent discount compared to its last sale price.

The three-story building sits on a 20-acre site located less than a mile from downtown Calabasas. Downtown Los Angeles is some 27 miles away, while the Los Angeles International Airport is 30 miles southeast.

READ ALSO: Strong Deals and High Prices Keep LA Among Top Office Markets

Completed in 1986, the property also known as The Park Calabasas underwent cosmetic renovations in 2019. Initially, the low-rise served as the corporate headquarters of Lockheed Martin and later as headquarters for Countrywide, operating as a single-tenant building for nearly 20 years. It now houses seven tenants across various industries.

The building features floorplates ranging between 16,670 and 93,170 square feet, six passenger elevators and almost 700 parking spaces. Amenities include an on-site cafeteria and jogging trail, as well as an open space for corporate events and outdoor meetings.

The Newmark team representing the seller included Co-Head of U.S. Capital Markets Kevin Shannon, Vice Chairmen Ken White, Rob Hannan, Michael Moll and Laura Stumm, along with Director Alex Beaton.

Los Angeles office sector remains steady

Greater Los Angeles’ office investment volume in the fourth quarter of 2024 reached $870 million, according to a CBRE market report. Additionally, the metro’s overall vacancy rate as of December clocked in at 23.9 percent.

At the end of last year, Los Angeles County acquired The Gas Company Tower, a 1.3 million-square-foot office building in the city’s downtown, for $200 million. Wilmington Trust sold the asset after having foreclosed in September on a $350 million CMBS loan.

Another notable deal in the area was Drawbridge Realty’s $185 million purchase of Arboretum Gateway, a 225,773-square-foot building in Santa Monica, Calif. Clarion Partners sold the property, which is 100 percent triple-net leased to Universal Music Group.

The post Cross Ocean JV Buys LA Asset for $69M appeared first on Commercial Property Executive.

The 226,000-square-foot transaction worth roughly $375 million closed in late December. It is one of the largest biosciences transactions in the Peninsula market and the largest new lease overall in San Mateo County, the San Francisco Business Times reported.

The deal comes at a time when the life science market in the Bay Area is struggling with job cuts and an industry slowdown.

WRNS Studio designed Elco Yards, which sits at the edge of downtown along the Caltrain corridor.

Cushman & Wakefield’s Ben Paul, Mike Courson, with Newmark, and Matt Germino, with CBRE, represented Chan Zuckerberg in lease negotiations. Paul will handle marketing.

CZI is an entity formed by Meta Platforms CEO Mark Zuckerberg and his wife, Priscilla Chan.

READ ALSO: Life Science Trends to Watch in 2025

The asset’s top-quality microscopes were a key reason for CZI’s decision, as they could help the company better understand how cancer cells influence tumor growth.

Lay of the land

IQHQ acquired Elco Yards from Greystar in November 2021. The surroundings include about 670,000 square feet of life science and office space and hundreds of planned residential units within 8 acres.

CZI occupies one of Elco Yards’ four buildings, each averaging over 200,000 square feet. The organization recently completed a 111,000-square-foot expansion at its nearby headquarters. The company’s mission is to study and eradicate human disease.

Redwood City is home to several life science companies.

iO Life Science is a virtual incubator for medtech inventors, early-stage startups and entrepreneurs. It provides resources and expertise to help fast-track innovations from ideation to commercialization.

Redwood LIFE is an innovation-focused environment with lab space and amenities that inspire collaboration and breakthroughs.

180 Life Sciences is dedicated to addressing pathological inflammation and developing therapeutics to treat diseases caused by inflammation.

The post Chan Zuckerberg Institute Lease Boosts Bay Area’s Life Science Sector appeared first on Commercial Property Executive.

To have your commercial real estate transaction featured, submit details to Agota Felhazi at agota.felhazi@cpe-mhn.com.

Read the February 2025 issue of CPE.

The post Transactions: February 2025 appeared first on Commercial Property Executive.

In the Viewpoint 2025 survey, IRR shared viewpoints from its nearly 600 valuation advisors across the U.S. and the Caribbean.

“In this market, fundamental value isn’t about speculation but real cash flow, strong locations and realistic tenant demand,” Anthony Graziano, CEO of IRR, told Commercial Property Executive.

Investors need to rely less on the cost of money and more on effective management to maximize operations by focusing on sustainable rent levels and assets with lasting economic function, Graziano advised.

“Long-term value lies in markets with strong job growth, economic drivers and favorable migration trends,” he said. “Fundamental value is not a definition—it is a recognition that investors need to get back to basics and study fundamental drivers that create long-term value.”

In the meantime, private investors have shifted capital allocations to alternatives such as senior housing, self storage, build-to-rent single-family and data centers.

Create a lasting impact

Graziano said the best real estate investments go beyond returns—they create lasting impact.

“Today’s most successful projects are mixed-use developments that integrate housing, retail and community spaces, especially in high-growth metros,” he said. “Developers are embracing adaptive reuse, transforming vacant malls, offices and hotels into vibrant mixed-income housing and health-care facilities, addressing market demand and community needs.”

Graziano pointed out that projects such as Nashville Yards and Richmond’s Diamond District showcase this transformation, seamlessly blending commercial space with housing, entertainment and public gathering areas.

READ ALSO: Which Asset Classes Stole the Spotlight in 2024?

Additionally, four developers are proposing a redevelopment of Boca Raton City Center in Boca Raton, Fla., incorporating these principles.

“These developments demonstrate that reimagining underutilized spaces isn’t just good urban planning; it’s a blueprint for sustainable, community-driven growth,” he added.

Trump policy points to ‘America’ first

As an over-arching theme, national economic policy action can have impacts (intended and unintended) on the economy, which nearly always affects the direction of real estate values, Graziano said.

“President Trump’s general thesis has always been clear: America First, which will generally be good for real estate and real estate investment in growth. He’s an expansionary president who focuses on investing in America’s economic strength, and disinvesting in activities that do not tie to American growth.”

The challenge on the real estate front will be balancing the America First growth focus with potential dislocations associated with abandoning prior administration policy, Graziano warned. Some examples include stated reductions in the federal workforce through DOGE, cuts to major programs that could have industry-specific impacts and significant divestiture of federal assets (land, buildings, leases, etc.).

Office determinant on federal workers

For the first time in years, Graziano said he is seeing a real policy push that could bring federal workers back to the office.

READ ALSO: Trump’s Gift to the Office Market

“If private employers follow the lead, it could finally stabilize the sector, especially for well-located Class A buildings,” he said. “Not every office building will make a comeback. Older Class B and C buildings continue to face an uphill battle, and many must be repurposed to stay viable. This is especially true of aging government buildings.”

Industrial shifts to domestic

Graziano said industrial remains the strongest asset class, but after years of rapid expansion, it’s shifting into a more measured growth phase.

He added there’s been a shift toward domestic production following the post-Covid reshoring trends.

“As President Trump implements the threatened tariffs and provides reshoring incentives, the industrial sector could see another wave of demand—especially in border states and major logistics hubs,” he said.

Labor shortages and high development costs remain real barriers, Graziano cautioned. Even with strong demand, constructing the next generation of industrial facilities won’t be easy or cheap, he anticipates. Port cities could see a fall-off in container throughput as imports directly correlate with port industrial demand.

Retail relies on confidence

Retail’s success is tied to consumer confidence.

“If President Trump’s tax policies put more money in people’s pockets, we could see a boost in spending—especially in restaurants, entertainment and service-based retail,” according to Graziano. “But there’s a flip side: if trade policies make imports more expensive, big-box stores and fast fashion retailers could take a hit if there is a consumer backlash on pricing.”

Graziano anticipates that this will also appear in the inflation stats, which could impact the Fed funds’ rate policy. “Expect strong performance from grocery-anchored centers and necessity-driven retail, which tend to weather economic volatility better than most.”

Multifamily remains steady

Multifamily has been one of the steadiest asset classes, but policy shifts could shake things up, according to Graziano.

“Multifamily is stabilizing, though affordability concerns are keeping investors cautious,” he said. “Some pockets of multifamily distress have been building in markets with high inventory deliveries.”

If President Trump extends tax cuts or eases regulations, more investment could flow into new development, Graziano anticipated.

But immigration policies and potential rent controls in some states could impact demand and operating costs. According to Graziano, housing is also a significant component of inflation statistics, so there will be competing interests to keep rent and housing growth strong, but not too strong, which will undermine inflation protections. “Investors must stay flexible and focus on markets with strong job growth and steady population gains to mitigate risks,” Graziano cautioned.

The post What Defines the Best CRE Investments Today? appeared first on Commercial Property Executive.

TailoredSpace has opened its latest coworking space in Orange County in San Clemente, Calif. This marks the city’s first full-service flex office.

The 10,500-square-foot location provides conference rooms, coffee and snacks, parking space, as well as member events and parties. The interior design represents a combination between a residential living room and a commercial space.

Other tenants at the property include Melin, 24 Hour Fitness and Saddleback Church.

Located at 100 Avenida La Pata, the building is some 3 miles from downtown San Clemente and has access to Interstate 5. John Wayne Airport is 28 miles away.

Lee & Associates Senior Vice President Tim Walker worked on behalf of the landlord in the transaction.

Orange County coworking footprint

Completed in 1999, the two-story, 43,560-square-foot building sits on a 9-acre site. The property has been under Metro Commercial Realty Corp.’s ownership since 2013, when W.P. Carey sold it for $11.3 million, according to CommercialEdge. In 2014, the asset became subject to a $15.5 million loan originated by EquiTrust Life Insurance Co., with a maturity date set for 2034, the same source shows.

The San Clemente office is the 10th TailoredSpace location in Southern California. The company’s coworking landscape includes nine other locations in Brea, Carlsbad, Chino Hills, Corona, Laguna Niguel, Rancho Cucamonga, Riverside, San Juan Capistrano and West Covina and plans to add five more coworking offices in the area this year.

TailoredSpace opened its Laguna Niguel location back in October 2024. The company occupies nearly 12,000 square feet on the entire first floor at a 280,979-square-foot retail campus, owned by Dunhill Partners.

The post TailoredSpace Expands Footprint in Orange County appeared first on Commercial Property Executive.

NVIDIA is expanding its Silicon Valley office holdings. The firm intends to buy from The Sobrato Organization a 500,000-square-foot campus located across the road from its headquarters, according to SiliconValley.com.

NVIDIA has leased the four buildings at 2701, 2711, 2721 and 2731 San Tomas Expressway in Santa Clara since April 2010. The tech company agreed to acquire the assets along with a parking garage at 2741 San Tomas Expressway. The price to be paid was not reported and a closing date was not disclosed.

READ ALSO: Top California Markets for Office Transactions

Completed in 2010, the 19.2-acre campus comprises three-story, 125,000-square-foot buildings with 41,667-square-foot floorplates, according to CommercialEdge. NVIDIA was the sole tenant at the property that’s across from its 2788 San Tomas Expressway corporate offices.

NVIDIA keeps expanding

In May, NVIDIA paid former landlord Preylock Holdings nearly $375 million for several sites also located near its headquarters, according to media reports. That deal included six parcels of land, eight buildings, two parking structures and 2 million square feet of future development rights, the San Francisco Standard reported. Data centers and lab facilities were part of that transaction as well.

In more recent expansion news, the firm leased an office and research building in north San Jose, Calif., from Menlo Equities in December. The 101,600-square-foot property is at 300 Holger Way.

Office sales in the Bay Area

The Bay Area ranked third in the U.S. for office sales volume last year, after Manhattan and Washington, D.C., according to a CommercialEdge report. The market witnessed more than $2.1 billion in transactions year-to-date as of November, with assets changing hands, on average, for $293 per square foot.

In one of the largest deals of the period, Microsoft paid $330 million for a five-building campus in Mountain View, Calif. The sale price equated to $513.2 per square foot.

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In preparing the report, the law firm analyzed more than 950 purchase and sale agreements and over 500 property management agreements—data from the volume of transactions that DLA Piper handles in major U.S. markets. Overall, the company noted, deal volume in acquisitions and dispositions, including joint ventures, was robust in 2024, despite the still-elevated cost of capital.

Investors were particularly interested in downtown and metro areas in major markets such as Washington, D.C., New York City and Chicago. Among the states, there was “significant transaction volume” in urban and suburban areas across California and Texas, DLA Piper found.

Among non-residential property types, industrial still represented the highest percentage of 2024 investment deals in the data set analyzed in the report, but just barely at 12 percent, down sharply from 21 percent in 2023 and 20 percent in 2022. Office investment ticked up from 8 percent in 2023 to 11 percent in 2024, showing that the sector isn’t completely kaput.

Investment in retail assets was stable at 9 percent of the total in 2024, the same as the year before, and hotels dropped from 4 percent to 1 percent over the same period, the report found.

The steepest year-over-year rise in investment, however, was in data centers. As recently as 2020 and ’21, none of DLA Piper clients were acquiring data centers, and only 1 percent were in 2022. By 2023, 4 percent of the deals involved data centers, and by 2024 the volume had swelled to 9 percent.

READ ALSO: CBRE Survey Indicates Optimism by Investors

Despite these movements in investor interest, the fact of the matter is that residential properties totaled the most: 40 percent of all the 2024 transactions studied by the report, a figure that hasn’t changed much since the pandemic (though only 15 percent of investors acquired multifamily in 2019).

Financial contingencies up slightly

The report also covered financial contingencies among the universe of transactions handled by the company, finding a slight increase in the total percentage of transactions in which financing contingencies were present, up from 10.71 percent in 2023 to 11.11 percent in 2024.

“We saw a more noticeable shift between contingencies for loan assumptions versus contingencies for new loans,” the report explained.

Of the 11.11 percent of transactions where a financing contingency was part of the deal, the percentage of loan assumption contingencies rose from 7.14 to 8.64 percent between 2023 and ’24, while the percentage of new financing contingencies dropped from 3.57 percent to 2.47 percent over the same period.

The report chalked up those movements to the fact that, while interest rates dropped somewhat in 2024, in many cases a buyer can still obtain a better rate by assuming existing financing, which tends to date from the period before the anti-inflation hike in rates.

The report also found that the most common survival period for representations and warranties continued to be 270 days, a period common to 46 percent of the transactions DLA Piper handled in 2024. The number-two most popular survival period was 180 days, which had a 28 percent frequency.

Penalties for breach of representations and warranties didn’t change much between 2023 and ’24, the report noted, especially those deals with purchase prices below $125 million. Larger deals saw more movement to increase average liability caps, especially those of more than $300 million.

Property management trends

Property management fees continued to be toward the middle of the range, the DLA Piper report found, with most coming in between 2 percent and 5 percent of rent, with an increase in fixed fee arrangements.

The clustering of property management fees in the middle range was especially noticeable in the residential sector, where (for example) about two-thirds of fees for apartments came in between 3 percent and 4 percent, with a similar range for student housing and manufactured housing. Senior housing fees were higher, however, three-quarters of which were above 5 percent.

Among non-residential property types, fees were more widely spread. For industrial, 35.9 percent of managers charged 5 percent or more, while the rest charged anything from less than 1 percent to as much as 5 percent. Office and data centers likewise were scattered across the range of fees.

Construction management fees across property types didn’t change much in 2024, the report noted. Most residential management fees are higher than 5 percent, with senior housing an exception at between 2 percent and 3 percent. For industrial, 41.8 percent of construction fees totaled 5 percent or more, but nearly a third of such fees came in between 2 percent and 3 percent.

The post Which Asset Classes Stole the Spotlight in 2024? appeared first on Commercial Property Executive.

Onward Investors has acquired Ameriprise Financial Center, a 960,000-square-foot office building in Minneapolis.

The high-rise traded for $6.3 million, representing a nearly 97 percent discount from its previous open-market sale price of $200 million in 2016, The Minneapolis/St. Paul Business Journal reported. GHR Foundation sold the asset after assuming control of the building in 2023, following the previous owner’s execution of a deed in lieu of foreclosure.

Morning Calm Management acquired the asset in 2016, according to CommercialEdge. The firm took out a $137.8 million loan financed by the seller, The Opus Group.

Located at 707 Second Ave. S., the property is in the city’s business district and less than 10 miles from the Minneapolis-Saint Paul International Airport.

READ ALSO: What’s Defining Office in 2025?

Constructed in 2000, the 31-story high-rise has floorplates averaging 35,000 square feet and an adjacent four-story parking ramp with 300 spots. Onward Investors is considering various possibilities for the property, including repurposing all or part of the building for non-office uses. Ameriprise Financial, which had its headquarters at the building since its completion, announced in late 2022 that it will vacate the space.

Last year, the Minneapolis Council passed the Office to Residential Conversions Amendment, which streamlines review processes, eliminates public hearing requirements and temporarily exempts converted buildings from the affordable housing policy for five years.

Minneapolis office activity

In December, Onward Investors formed a joint venture with Cross Ocean Partners and Neuberger Berman Special Situations client funds for the acquisition of Wells Fargo Center, the third-tallest building in Minneapolis. Starwood Capital Group sold the 57-story, 1.2 million-square-foot asset.

Last year, Minneapolis’ office investment volume totaled more than $735 million, an 181 percent increase from 2023, according to a CBRE report. Additionally, the market’s vacancy rate as of December clocked in at 24.1 percent, a 10-basis-point decrease quarter-over-quarter. Nevertheless, the city’s central business submarket recorded one of the highest rates at 27.6 percent, the same report shows.

The post Onward Investors Acquires 960 KSF Minneapolis Building appeared first on Commercial Property Executive.

The Trepp CMBS Special Servicing Rate climbed higher in December 2024, increasing 36 basis points to reach 9.89 percent. Throughout 2024, the rate increased about 311 basis points. The overall special servicing rate has not breached 10 percent since November 2020.

The mixed-use sector experienced the highest month-over-month increase in the special servicing rate, soaring 182 basis points to 11.72 percent in December, surpassing 11 percent for the first time since 2013. The multifamily sector also saw a sizable increase in the special servicing rate in December, increasing 136 basis points to 8.72 percent.

The office special servicing rate rose 15 basis points to 14.78 percent from 14.63 percent in November. The last time the office rate was above 14 percent was for three months in 2012, and it has not breached 15 percent since at least the year 2000. The retail rate declined 12 basis points to 11.67 percent, after five consecutive months of increases. Finally, the lodging rate rose by 14 basis points from 8.15 percent to 8.29 percent in December.

—Posted on January 31, 2024

The Trepp CMBS Special Servicing Rate climbed 39 basis points to reach 9.53 percent in November. The rate has increased about 275 basis points so far in 2024, with November seeing the second-largest monthly jump in the overall rate in 2024, following the 80-basis-point increase in April.

About $3.7 billion in outstanding loans transferred to special servicing in November, which is the largest amount that has transferred in a given month in the last six months. The office sector claimed the largest proportion at 35 percent of the newly special serviced loan amount, and the rest of the newly special serviced loan balance was evenly distributed across the multifamily, mixed-use and retail sectors.

The largest loan that transferred to special servicing in November was also the loan that drove the substantial uptick in the mixed-use rate. The $742.8 million 1515 Broadway loan transferred to special servicing due to imminent balloon payment default ahead of its March 2025 maturity date.

—Posted on December 27, 2024

The Trepp CMBS Special Servicing Rate increased another 34 basis points to reach 9.14 percent in October 2024.

In the last six months, the rate has increased just over 100 basis points, with the October figurereflecting the tenth consecutive monthly increase.

Among the major property types, the office sector saw the highest month-over-month increase in the special servicing rate, surging 136 basis points to 13.94 percent. Compared to October 2023, the office rate has climbed 539 basis points. The last time the office special servicing rate breached 13 percent was in November 2011, after which the rate stayed above 13 percent until July 2012.

The lodging rate has continued to climb, reaching 8.32 percent in October; the last time it was above 8 percent was in May 2022 when the rate was coming down from Covid highs. The multifamily and retail property types also experienced upticks in October, rising 14 basis points to 6.21 percent and 14 basis points to 11.37 percent, respectively.

—Posted on November 26, 2024

The Trepp CMBS Special Servicing Rate rose substantially in September, jumping up 33 basis points to reach 8.79 percent. This was the ninth consecutive monthly increase, and the second-largest uptick of 2024.

Property type specifics revealed some interesting statistics. Distress was consistent throughout, with the respective special servicing rates of the five major property types all increasing. These increases varied in degree, but four of the five property types increased by at least 30 basis points. Driving the overall increase in September was the office sector, which surged 67 basis points to 12.58 percent. The office rate is now up more than 200 basis points in the past four months alone, with distress continuing to mount. The multifamily rate rose 36 basis points to 6.07 percent, surpassing the 6 percent mark for the first time in nearly nine years. Furthermore, the retail rate reached a near two-year high of 11.22 percent and the lodging rate hit a two-year high of 7.84 percent.

—Posted on October 25, 2024

The Trepp CMBS Special Servicing Rate took another jump in August, climbing 16 basis points to 8.46 percent. The rate has still sustained an increase during every month of 2024, and reached another three-year record high in August.

Parsing it out by property type, three experienced substantial upticks last month, each by at least 60 basis points. The multifamily rate rose 60 basis points to 5.71 percent, setting a near nine-year high. The last time the multifamily rate was higher was in December 2015. Furthermore, both the mixed-use rate and office rate increased 66 basis points each in August. The mixed-use rate now sits at 9.59 percent, the highest it has climbed since May 2013. The office rate rose to 11.91 percent, the highest it has reached since April 2013. Both sectors have risen significantly in the past year. Since August 2023, the mixed-use rate has increased more than 265 basis points, and the office rate has pushed higher by more than 415 basis points.

—Posted on September 27, 2024

The Trepp CMBS Special Servicing Rate pushed higher in July, increasing 7 basis points to reach 8.30 percent. The rate began 2024 at 6.95 percent and has increased every month since. It currently sits at a 3-year-high, is more than 180 basis points higher than the July 2023 rate of 6.62 percent and clears the July 2022 rate of 4.80 percent by 350 basis points.

Into property type specifics, most experienced minimal change in July, with a few only up or down by around 5 basis points. That said, two property types did change by about 40 basis points each, with one of them driving the uptick in the overall rate. The office special servicing rate rose 46 basis points in July to reach 11.25 percent. The last time this rate eclipsed 11.00 percent was back in August of 2013. Similar to the overall rate, office special servicing has largely been on the rise in 2024, and currently sits 150 basis points higher than its January level of 9.74 percent. After reaching an 11-year high last month, the mixed-use rate pulled back 40 basis points, falling back under 9.00 percent to 8.93 percent.

—Posted on August 30, 2024

The Trepp CMBS Special Servicing Rate ticked up slightly in June, rising 2 basis points to 8.23 percent. Despite this month’s increase being minimal, the rate itself remains at a very elevated level. Prior to the Covid-19 pandemic, the last time the rate eclipsed this month’s 8.23 percent was back in January 2014. With June’s modest uptick, this now marks the sixth consecutive monthly incline for the special servicing rate.

Parsing it out, there were a few property types that experienced more than modest change. Mixed-use special servicing rose most, up 40 basis points in June to hit 9.34 percent. This is the first time the mixed-use rate has eclipsed 9.00 percent since July 2013. The office rate also rose in June, increasing 27 basis points to 10.79 percent after its first decline of the year one month prior. Two property types that saw material improvement were lodging and multifamily, with drops of 54 basis points and 26 basis points, respectively. Though the multifamily rate experienced some relief, it remains relatively high, still sitting above 5.00 percent.

—Posted on July 31, 2024

The Trepp CMBS Special Servicing Rate pushed higher in May, up 10 basis points to 8.21 percent. Though this increase was modest compared to the 80 basis point leap a month prior, the overall rate is now at its highest level since June 2021. The rate has increased every month of 2024 and is now 1.43 percent higher than the 6.78 percent mark that it closed out in 2023.

Across individual property types, there were four that experienced changes of at least 30 basis points. Most notable was office, which finally experienced some relief, falling 32 basis points to 10.52 percent. This was office’s first drop of 2024, and a welcome sight considering that the office rate was on pace to eclipse 11 percent for the first time since 2013. Mixed-use saw the largest monthly increase in special servicing rate across the property types, up 69 basis points to 8.94 percent. The mixed-use rate has been consistently rising, up every month this year, and currently sitting at a near 11-year high.

—Posted on June 28, 2024

The Trepp CMBS Special Servicing Rate leaped in April, rising 80 basis points to reach 8.11 percent. This marks the largest monthly jump that the rate has experienced in nearly four years, with higher monthly upticks only reached during the COVID-19 pandemic in mid-2020. Furthermore, this is the first time that the rate has eclipsed the 8.00 percent mark since July 2021.

There were some big movers when analyzing by property type, with three up by at least 100 basis points. The office rate continued higher, pushing up to 10.84 percent. Retail was up 106 basis points in April after hardly moving a month prior. The biggest movers were by far ‘Other’ properties and multifamily, which increased a whopping 236 basis points and 269 basis points, respectively. The multifamily rate rose to 5.10 percent, up past the 5.00 percent mark for the first time since June 2017.

—Posted on May 30, 2024

The Trepp CMBS Special Servicing Rate jumped up to 7.31 percent in March, rising 17 basis points from the month before. This now marks the fifth straight month of inclines, over which time the rate has increased over 50 basis points.

Into property type specifics, there were mostly modest increases across the board, aside from lodging properties, which jumped 48 basis points from February. Retail’s two basis point decline was the only monthly decrease, though the industrial rate remained unchanged. Office sustained a 27-basis point increase to reach 10.30 percent, again topping the 10-year high it hit last month.

—Posted on April 26, 2024

The Trepp CMBS Special Servicing Report continued to rise in February, increasing nineteen basis points to reach 7.14 percent.This is the first time the overall rate has surpassed the 7 percent mark in about 2.5 years.

Breaking it down by property type, three notable sectors sustained material upticks to their rates, causing the overall rate to increase as it did. Office, mixed-use, and retail properties all experienced monthly inclines of at least twenty basis points. Together, these three sectors account for over 70 percent of the special servicing balance across all property types, and with respect to new transfers, they represented over 90 percent of February’s total. This month, the retail special servicing rate climbed by 44 basis points, while office and mixed-use both saw increases of 30 and 22 basis points, respectively. The office rate reached 10.04% in February, the first time since it has entered double-digits since 2013.

—Posted on March 29, 2024

In January, the Trepp CMBS Special Servicing Rate climbed 17 basis points, reaching 6.95 percent. After falling slightly in December, the rise this month has brought the rate to its highest level since October of 2021.

Performance across property types was a mixed bag – with many sustaining substantial increases or decreases to their respective rates. Three property types saw month-over-month changes that exceeded 80 basis points. After fluctuating only slightly for the closing months of 2023, the multifamily rate dropped 83 basis points to 2.34 percent in January 2024. The property type with the largest increase, and the main driver of the overall rate increase, was the office sector. The office special servicing rate rose 129
basis points to 9.74 percent this month, its highest month-over-month increase ever. The last time the office rate exceeded its current level was over a decade ago.

—Posted on February 28, 2024

The post 2024 Special Servicing Rates appeared first on Commercial Property Executive.

The index rose 5 percent to 126.6 from its all-time high reading of 121.1 in the third quarter of 2024.

The BOG comprises more than 50 senior executives in commercial real estate finance. They represent all lending and mortgage-related debt investing sectors, including balance sheet and securitized lenders, loan and bond investors, mortgage bankers, private equity firms, loan servicers, rating agencies, attorneys, accountants and others.

Some 95 percent of respondents expect transaction volume to increase by at least 10 percent in 2025, with multifamily (30 percent) and office (23 percent) offering the best risk-adjusted opportunities. A majority (51 percent) said the “higher-for-longer” forecast for interest rates is a concern.

The index measures seven key categories, as follows.

Economic outlook

CREFC found that optimism continues to grow, with 42 percent of respondents expecting improved economic performance over the next 12 months, compared to 32 percent in the third quarter.

“Optimism in the commercial real estate market continues to grow, reflecting increasing confidence in economic stability and future growth,” Mario Saldana, vice president of investments at Tricera Capital, told Commercial Property Executive.

Investors and industry participants anticipate stronger market performance driven by resilient demand, steady employment levels and easing inflation concerns, he added.

“While economic uncertainties persist, sentiment suggests a positive trajectory for investment, leasing activity and overall market expansion. There could be heightened transaction volumes and capital deployment if this momentum continues, reinforcing long-term confidence in the sector.”

READ ALSO: How Geopolitics Will Shape CRE Investment in 2025

However, the economy isn’t healthy, and the overall cost of capital will continue to be high throughout the year, warns Dave Sobelman, founder & CEO of publicly traded REIT Generation Income Properties.

“Despite a 10 percent increase in optimism, roughly 60 percent of real estate professionals still do not see material improvement,” he said. “CRE professionals are somewhat resigned to another year of uncertainty.”

Federal policy

CREFC showed that 74 percent expect a positive impact on CRE finance-related businesses, up from 17 percent last quarter.

“One can see the trend that started in November and includes a more considerable sentiment around economic growth in the U.S., given the new administration,” Jeff Holzmann, COO of RREAF Holdings, told CPE. “Regardless of political preferences, the stock market has indicated more substantial stock prices due to the expected changes indicated by the incoming administration.”

Reduced spending, added pressure on the Fed to lower rates, more favorable tax cuts and lax regulations should lead to stronger economic activity, he added.

Rate impact

CREFC found that 58 percent are now neutral on rates, and those having positive expectations sank.

“As we exited the third quarter, we saw the first rate cut in years [by 50 basis points],” said Robert Martinek, director at EisnerAmper. “Inflation had moderated, and another two cuts totaling 75 basis points soon followed. Consumers were anticipating an additional four to five cuts in 2025. After the election, most people considered Trump to be pro-business. However, many view his policies as inflationary, and the 10-year treasury rate surged. Market participants are now hoping, not expecting additional rate cuts.”

READ ALSO: Fed Leaves Interest Rates Alone

Saldana added that uncertainty about interest rates continues to shape industry sentiment, with market participants adjusting expectations for borrowing costs and capital markets activity. “While higher rates initially slowed transaction volumes, the market has stabilized as investors and borrowers adapt.”

CRE fundamentals

CREFC found that 65 percent expect improvement, and 12 percent expect worsening.

Melanie French, CEO of RR Living, told CPE that multifamily owners, investors and managers are seeing a recent resurgence of distressed assets in the market.

“While it is not good for the former owners, these units returning to trading spur job growth through increased value-add renovations,” French said. “I love seeing this influx returning as it freshens the look and longevity of those communities.”

Transaction activity and financing demand

CREFC found that 86 percent of investors and 91 percent of financiers see higher activity.

“Activity started to recover in 2024, with a notable acceleration in the latter half of the year, particularly in lending markets,” said Trey Morsbach, executive managing director & co-lead of JLL Capital Market’s Debt Advisory & Corporate Finance.

“We’re observing a marked increase in the number of investors going on offense, with aggregate bidding activity on transactions rising by more than 40 percent in the fourth quarter of 2024 on a year-over-year basis.”

Institutional capital is increasingly prominent in acquisitions and transactions of +$100 million. ODCE redemption queues are easing, and valuation marks are nearing parity with market values, allowing more core capital to return, Morsbach added.

Market liquidity

CREFC found that 81 percent expect improved conditions, slightly higher than the previous quarter.

Sobelman told CPE he equates 2025 to 2011.

“Cap rates have stabilized to a realistic and higher level, and lenders are seemingly more comfortable re-entering the market due to proper valuations congruent with the debt rates and terms available,” he said.

Overall sentiment

CREFC found that 77 percent express positive sentiment, up from 57 percent last quarter.

“I just left an industry conference, and sentiment amongst everyone was higher than it’s been for years,” said Pierre Debbas, Romer Debbas LLP.

He added that moving past the election, optimism is growing with President Trump’s economic agenda, the inevitable reduction in interest rates, and the reduction in government spending and inflation, which should bring down the 10-year U.S. Treasury and, subsequently, interest rates.

“Multifamily is still strong as demand for rents has been consistent given the inability of most people to afford a home, and investors are still targeting this asset class.”

The post CRE Sentiment Index Soars to New High: CREFC appeared first on Commercial Property Executive.

The maritime assurance and risk management firm DNV USA has signed a 62,779-square-foot lease at The Offices at Greenhouse, a 208,809-square-foot office property in Houston’s Energy Corridor submarket. The company will relocate from its current location in Katy, Texas.

The deal brought The Offices at Greenhouse to 74 percent occupancy, leaving 52,334 square feet available for lease. The tenant roster includes Patten Title Co., SPB Hospitality, Med Sales Institute and DSWi, among others, CommercialEdge shows.

Located at 19219 Katy Freeway, the property has access to Interstate 10. Downtown Houston is 23 miles away, while William P. Hobby Airport is some 34 miles southeast.

Transwestern’s Executive Managing Director Doug Little, Vice President Jack Scharnberg and Senior Vice President Kelli Gault worked on behalf of Capital Commercial Investments. JLL’s Senior Vice President Collin Grimes represented the tenant.

READ ALSO: What’s Defining Office in 2025?

Capital Commercial Investments acquired the asset last year. The company paid $17.6 million to seller KBS Realty Advisors in July, according to CommercialEdge. The property traded at $86.6 per square foot, a notable discount from the previous sale, closed in 2016 at $47 million, or at $231.4 per square foot, the same source shows.

After the acquisition, the owner commenced a capital improvement strategy at the property. Upgrades are ongoing and include the addition of EV charging stations, a fitness center and renovations of the outdoor spaces.

Built in 2014, the five-story Class A property has a LEED Silver certification and includes 40,000-square-foot floorplates, a tenant lounge, a conference center and 900 vehicle parking spots. Additionally, the building features car wash or detailing services, as well as bike storage.

In November last year, the company made another purchase in the same submarket when it picked up Energy Crossing II, a 327,404-square-foot office building, from Invesco Real Estate. At the time of the sale, the property was 30 percent leased.

Rising vacancies in Texas

The Southern region’s office markets registered high vacancies throughout 2024, with Texas markets posting some of the most notable surges of year-over-year increases, a recent CommercialEdge report shows. As of December, Houston’s office vacancy rate stood at 24.5 percent, above the 19.8 percent national average but it was the second-highest in the region, after Austin’s 27.9 percent rate.

Recent deals in Houston include Brookfield Properties’ 259,774-square-foot renewal agreement at its Allen Center office campus. Plains Marketing LP, a tenant at the property since 1992, extended its commitment through 2036.

In December, Prescott Group inked a 94,179-square-foot leasing deal with Ezee Fiber at its 567,333-square-foot building, currently undergoing upgrades. The tenant will consolidate two Houston locations into a large headquarters at the property.

The post Capital Commercial Inks 63 KSF Lease in Houston appeared first on Commercial Property Executive.

Rudin has secured another agreement for its 3 Times Square building in Midtown Manhattan, signing Spectrum Reach to an 11-year lease. The company will take over the 26th and 27th floors of the 30-story tower.

Spectrum Reach is Charter Communications’ advertising sales business. This fall, it will relocate from its current office at 1633 Broadway into what is also called the Thomson Reuters Building.

Spectrum Reach was represented by Robert Stillman, Cara Chayet and Liz Lash of CBRE. Thomas Keating of Rudin and the Cushman & Wakefield agency team of Ron Lo Russo, John Cefaly, Paige Engeldrum, Lou D’Avanzo, Mike Burgio and Dan Organ represented the ownership.

Rudin has been filling the 925,000-square-foot tower that overlooks the Hudson River lately. Remy Cointreau, Anchin, Block & Anchin and Touro University are other recent tenants. Thomson Reuters, an original tenant, has renewed.

Last February, law firm Kilpatrick Townsend & Stockton LLP signed a 10-year lease to take over the building’s 28th floor. In June 2023, Rudin signed a five-year lease with West Publishing Corp.

Focus on wellness and sustainability

The building, designed by Fox & Fowle Architects, opened in 2001 as the North American headquarters of Reuters Group PLC and received capital improvements through FXCollaborative in 2020. The work included a new, glass-walled triple-height lobby and a decorative sculptural façade screen, in keeping with the Times Square aesthetic.

READ ALSO: Office Sector Faces Ongoing Challenges Into 2025

Other upgrades include a touchless entry system, a fully renovated destination dispatch elevator system, a conference and event center, a coffee bar, a dining area and a fitness center with locker rooms.

The building’s floorplates range from 28,000 square feet to 35,000 square feet and are column-free.

WiredScore awarded the building a Platinum certification for its connectivity. It also gained a SmartScore Gold certification for its user experience and sustainability.

Additionally, the building achieved the WELL Health-Safety Rating for its efforts to emphasize health and wellness for building occupants. Its AI-driven Nantum OS improves building operational efficiency, decreases carbon emissions and optimizes indoor comfort.

The post Rudin Lands HQ Lease at Manhattan Tower appeared first on Commercial Property Executive.

The national office vacancy rate surged throughout the past year and is unlikely to decline this year despite return-to-office mandates from prominent companies. Hybrid and remote work have solidified their place, and any vacancy reductions will likely stem from office stock shrinking due to obsolescence or conversions rather than rising occupancy.

Conversions, while ongoing, face financial and logistical hurdles that limit their pace. Programs like New York’s Office Conversion Accelerator and D.C.’s Office-to-Anything initiative aim to encourage adaptive reuse, with growing interest in converting offices to data centers, industrial spaces and coworking hubs alongside residential projects.

Sales volume might see a slight uptick, but prices are expected to stagnate. Distressed transactions will dominate, driven by maturing loans on properties struggling with occupancy challenges and persistent inflation pressures.

READ ALSO: What’s Defining Office in 2025?

In December, office-using employment sectors gained 44,000 jobs, marking a 40-basis-point year-over-year growth and bringing the total to 35 million. Most of this growth occurred within the professional and business services sector, which gained 28,000 jobs. In comparison, the financial activities sector added 13,000 positions, while the information sector saw a modest rise of just 10,000 jobs.

The office construction pipeline has continued to shrink, with 54.7 million square feet underway at the end of 2024—equivalent to just 0.8 percent of total inventory, according to CommercialEdge data. This marks a significant 43.6 percent decline from the 97 million square feet under construction at the beginning of last year. In 2024, only 43.2 million square feet of office space was completed, making it the smallest annual delivery volume since 2013.

Boston led the nation with 8.7 million square feet of office space under construction, representing 3.4 percent of its total inventory. San Francisco followed with 3.8 million square feet, or 2.3 percent of its stock. Austin reported 3.5 million square feet under construction, or 3.7 percent of its total stock. San Diego had 3.1 million square feet underway (3.1 percent of stock), closely followed by Dallas with 2.9 million square feet, or 1.0 percent of its inventory. Meanwhile, Manhattan had more than 2.7 million square feet in progress, making up 0.6 percent of its inventory.

Office vacancies surge across key markets

The national office vacancy rate climbed to 19.8 percent at the end of December 2024, marking a 150-basis-point increase compared to the same time in 2023 and a 40-basis-point rise from the previous month, according to CommercialEdge. Although vacancies have risen across all markets in recent years, some have been hit harder than others.

Among the top 25 markets tracked by CommercialEdge, six experienced vacancy rate hikes exceeding 500 basis points in 2024. Austin led the pack with a 690-basis-point surge since December 2023, pushing its vacancy rate to 27.9 percent. Other markets with significant increases included the Bay Area and Portland (both up 620 basis points), San Francisco and Philadelphia (up 520 basis points) and Boston (up 510 basis points).

In December, national full-service equivalent listing rates averaged $33.11 per square foot, marking a 26-cent increase from the prior month and a 4.5 percent rise year-over-year. Miami posted the highest listing rate at $54.37 per square foot, closely followed by the Bay Area at $54.13 and Boston at $53.35. Austin and San Diego also stood out with rates of $45.68 and $43.28 per square foot, respectively.

Read the full CommercialEdge office report.

The post Office Report: Sector Faces Ongoing Challenges Into 2025 appeared first on Commercial Property Executive.

The Trepp CMBS Delinquency Rate rose once more in December 2024, with the overall rate increasing 17 basis points to 6.57 percent.

The office delinquency rate rose 63 basis points in December to 11.01 percent, surpassing the 11 percent mark for the first time since Trepp began tracking delinquency rates in 2000. Prior to this, the highest the office delinquency rate had climbed was to 10.70 percent, reached in December 2012. There was north of $2 billion in office loans that became newly delinquent in December.

READ ALSO: What’s Ahead for CMBS in 2025?

The retail delinquency rate experienced the largest respective increase across property types, jumping 86 basis points to 7.43 percent. The retail delinquency rate has increased more than 115 basis points over the course of 2024 and is currently at a 2.5 year high. The largest newly delinquent retail loan was a massive single-asset, single-borrower loan with a balance of more than $500 million.

If we included loans that are beyond their maturity date but current on interest, the delinquency rate would be 8.58 percent, up 57 basis points from November.

The percentage of loans in the 30 days delinquent bucket is 0.26 percent, down 26 basis points for the month. Our numbers assume defeased loans are still part of the denominator unless otherwise specified.

—Posted on January 30, 2024

The Trepp CMBS Delinquency soared in November 2024, with the overall delinquency rate increasing 42 basis points to 6.40 percent.

This month, the office, multifamily and lodging property types all saw substantial increases in the sector-specific delinquency rates. The office delinquency rate surpassed 10 percent in November, increasing about 100 basis points to 10.38 percent. There were multiple large newly delinquent office loans that drove the office delinquency rate higher, with the office sector making up 60 percent of the net change in delinquent loan amount in November.

The percentage of loans in the 30 days delinquent bucket is 0.52 percent, up 9 basis points for the month.

Our numbers assume defeased loans are still part of the denominator unless otherwise specified.

—Posted on December 26, 2024

The Trepp CMBS Delinquency Rate continued its upward trend in October 2024, increasing 28 basis points to 5.98 percent.

In October, all major commercial property types saw rate decreases or remained unchanged in the
delinquency rate, except for the office sector, which saw an increase of 101 basis points. The office
delinquency rate reached 9.37 percent, up from 8.36 percent in September. The last time the office rate breached 9 percent was in 2012 and 2013, when the overall CMBS delinquency rate reached an all-time high of 10.34 percent in July 2012.

The office sector made up more than 60 percent of the newly delinquent loan amount in October.

Although there was more than $3 billion in newly delinquent loans across major property types,
almost $2 billion in loan balance was either paid off or removed from the delinquent loan category
this month, resulting in about $1 billion in net increase in the overall dollar amount of delinquent
loans in October.

A large office loan that previously was current on payments became 30 days delinquent in October
and was a main driver for the office delinquency rate increase this month. All split pieces of this
loan, one of which is a single-asset single-borrower (SASB) loan, reflected this newly delinquent
status in October.

If we included loans that are beyond their maturity date but current on interest, the delinquency rate
would be 7.73 percent, up 58 basis points from September.

The percentage of loans in the 30 days delinquent bucket is 0.43 percent, up 26 basis points for the month.

Our numbers assume defeased loans are still part of the denominator unless otherwise specified.

—Posted on November 25, 2024

The Trepp CMBS Delinquency Rate continued its uphill climb in September 2024. Overall, the delinquency rate rose 26 basis points to 5.70 percent.

Most of the major property types contributed to the rise in the overall rate, but the retail sector contributed to about 50 percent of the net change in the total delinquent loan amount.

The retail delinquency rate rose 86 basis points in September, reaching 7.07 percent. The last time the retail delinquency rate was above 7.0 percent was in April 2022. A large single-asset single-borrower (SASB) deal that had previously been current on payments but now shows a delinquency status of nonperforming matured balloon, was one of many large retail loans to turn delinquent in September.

The office sector accounted for 37 percent of the $2 billion net increase in the overall dollar amount of delinquent loans in September, with the office delinquency rate increasing 39 basis points to 8.36 percent.

If we included loans that are beyond their maturity date but current on interest payments, the delinquency rate would be 7.15 percent, down six basis points from August.

The percentage of loans in the 30 days delinquent bucket is 0.17 percent, down eight basis points for the month.

Our numbers assume defeased loans are still part of the denominator unless otherwise specified.

—Posted on October 28, 2024

The Trepp CMBS Delinquency Rate inched up again in August 2024. Overall, the delinquency rate rose one basis point to 5.44 percent.

Unlike many months, the office sector was not responsible for the slight uptick in the overall rate. Although there was $1.25 billion worth of newly delinquent office loans, counteracting this was $1.55 billion worth of office loans that were delinquent a month prior, but were no longer delinquent in August (otherwise known as “cured”). In August, the property type that contributed the largest net change in delinquent dollars was the multifamily sector, with a total of $407.77 million.

The multifamily delinquency rate rose 67 basis points in August, reaching 3.30 percent.

This is the highest the multifamily rate has climbed in more than three years. The last time the rate even eclipsed the 3.00 percent mark was in July 2021. For context, there was a large multifamily loan that accounted for north of 54 percent of the property type’s newly delinquent total. This was a portfolio loan that had previously been current on payments but now shows a delinquency status of non-performing matured balloon.

If we included loans that are beyond their maturity date but current on interest, the delinquency rate would be 7.21 percent, up 43 basis points from July.

The percentage of loans in the 30 days delinquent bucket is 0.25 percent, unchanged for the month.

Our numbers assume defeased loans are still part of the denominator unless otherwise specified.

—Posted on September 25, 2024

The Trepp CMBS Delinquency rate continued ticking up in July 2024. Overall, the delinquency rate increased 8 basis points to 5.43 percent.

The increase was primarily driven by the office sector, which accounted for almost two-thirds of newly delinquent loans in July. The office delinquency rate is now above 8 percent for the first time since November 2013 when the rate was at 8.58 percent. About $1.88 billion in office loans became newly delinquent in July, which was offset by just shy of $600 million in office loans that were 30+ days delinquent in June but were no longer delinquent in July.

The two property sectors that saw a decline in the delinquency rate were retail and lodging.

The largest loan that became delinquent in July contributed to about one-third of the amount of newly delinquent office loans. It was an office loan that had its delinquency status turn back to nonperforming matured balloon from performing matured balloon. The status on the loan has flipped back and forth a couple times since the loan defaulted at maturity in December 2023.

If we included loans that are beyond their maturity date but current on interest, the delinquency rate would be 6.78 percent, up 24 basis points from June.

The percentage of loans in the 30 days delinquent bucket is 0.25 percent, down 11 basis points for the month.

Our numbers assume defeased loans are still part of the denominator unless otherwise specified.

—Posted on August 28, 2024

The Trepp CMBS delinquency rate jumped back above 5% in June 2024. The increase is somewhat expected after last month’s slight retreat given that the CMBS delinquency rate has been on an upward trend, increasing in four of the last six months. Overall, the delinquency rate increased 38 basis points to 5.35 percent.

The net increase in delinquent loans in June across the five major property types was just shy of $2 billion, with the office sector accounting for half of the net increase. There was roughly $1.87 billion in newly delinquent office loans during the month which was offset by roughly $900 million in office loans that were 30+ days delinquent in May but were no longer delinquent in June.

The other two sectors that posted large increases in their respective delinquency rates were retail and multifamily, accounting for 27 percent and 20 percent, respectively, of the $2 billion net increase in the overall dollar amount of delinquent loans in June. The retail sector had a roughly $525 million net increase in the volume of delinquent loans in June. The four largest loans that became delinquent in June had balances greater than $100 million and were all malls.

If we included loans that are beyond their maturity date but current on interest, the delinquency rate would be 6.54 percent, up 54 basis points from May.

The percentage of loans in the 30 days delinquent bucket is 0.36 percent, up 1 basis point for the month.

Our numbers assume defeased loans are still part of the denominator unless otherwise specified.

—Posted on July 24, 2024

The Trepp CMBS Delinquency rate dipped back below 5 percent in May 2024, a welcome sign after last month’s surge. Overall, the delinquency rate declined 10 basis points to 4.97 percent.

The decrease was primarily driven by some sizable resolutions in the office sector. A little more than $2 billion in office loans resolved in May, either because the loans flipped back to non-delinquent during the month, or because the loan was disposed. Five office loans accounted for $1.7 billion of the $2 billion. If the $2 billion in office resolutions had remained delinquent, the overall May CMBS delinquency rate would have been almost 26 basis points higher at 5.33 percent and the May office delinquency rate would have been roughly 90 basis points higher at 8.48 percent.

Since the overall rate only decreased 10 basis points, what offset the sizable amount of office resolutions? Ironically, it was also due to office, at least in part. There were approximately $1.2 billion in newly delinquent office loans in May. In addition, the retail, lodging, and multifamily sectors also had sizable amounts of newly delinquent loans, with $995 million in newly delinquent retail loans, $238 million in lodging loans, and $245 million in multifamily loans. The net increase in delinquent loans for each of these three sectors was less since, similar to the office sector, there was a solid amount of loans that resolved in May as well.

If we included loans that are beyond their maturity date but current on interest, the delinquency rate would be 6.00 percent, up 16 basis points from April.

The percentage of loans in the 30-days delinquent bucket is 0.35 percent, up 12 basis points for the month.

Our numbers assume defeased loans are still part of the denominator unless otherwise specified.

—Posted on June 27, 2024

The Trepp CMBS Delinquency rate surged in April 2024 after posting a slight decline the month prior. Overall, the delinquency rate increased 40 basis points to 5.07 percent, the highest since September 2021 when the rate was 5.35 percent.

The increase was driven by spikes in the office, lodging, and retail sectors, with more than a dozen loans with outstanding balances greater than $100 million becoming delinquent during April. The size of the month-over-month increases for each of these three property sectors was the highest in almost a year.

If we included loans that are beyond their maturity date but current on interest, the delinquency rate would be 5.84 percent, up 41 basis points from March.

The percentage of loans in the 30 days delinquent bucket is 0.23 percent, up 7 basis points for the month.

Our numbers assume defeased loans are still part of the denominator unless otherwise specified.

—Posted on May 29, 2024

The Trepp CMBS Delinquency rate dropped slightly in March 2024. Overall, the delinquency rate declined 4 basis points to 4.67 percent.

The decline was almost exclusively due to the continued improvement in the retail sector as it notched its fourth consecutive monthly decline. The retail delinquency rate declined 47 basis points in March to 5.56 percent.

Ironically, the office sector was one of only two sectors that saw a decline in the delinquency rate. The office delinquency rate declined 5 basis points to 6.58 percent.

If we included loans that are beyond their maturity date but current on interest, the delinquency rate would be 5.43 percent, down 26 basis points from February.

The percentage of loans in the 30 days delinquent bucket is 0.16 percent, down 14 basis points for the month.

Our numbers assume defeased loans are still part of the denominator unless otherwise specified.

—Posted on April 30, 2024

The Trepp CMBS Delinquency rate inched up in February. Overall, the delinquency rate rose 5 basis points to 4.71 percent.

In the heavily watched office segment, delinquencies jumped 33 basis points to 6.63 percent. The month-over-month increase in February is roughly in-line with the average monthly increase for the sector over the prior 12 months, increasing by 37 basis points per month on average.

The retail segment notched the largest decline of all property sectors for the month, dropping 24 basis points to 6.03 percent.

If we included loans that are beyond their maturity date but current on interest, the delinquency rate would be 5.69 percent, up seven basis points from January.

The percentage of loans in the 30 days delinquent bucket is 0.30 percent, up six basis points for the month.

Our numbers assume defeased loans are still part of the denominator unless otherwise specified.

—Posted on March 28, 2024

The Trepp CMBS Delinquency rate rose modestly in January The Trepp CMBS Delinquency rate rose modestly in January 2024. Overall, the delinquency rate rose 15 basis points to
4.66 percent.

Delinquencies in the heavily-watched office sector experienced their most significant increase since September 2023. The office delinquency rate jumped 48 basis points to 6.30 percent.

The multifamily segment notched a substantial decline, dropping 71 basis points for the month. The decline can be attributed to a large 2019 single-asset, single-borrower (SASB) apartment loan in San Francisco that was disposed in January.

If we included loans that are beyond their maturity date but current on interest, the delinquency rate would be 5.62 percent, up 13 basis points from December.

The percentage of loans in the 30 days delinquent bucket is 0.24 percent, up one basis point for the month.

Our numbers assume defeased loans are still part of the denominator unless otherwise specified.

—Posted on February 29, 2024

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Launched in 2020, Generate is the first drug generation company using a machine learning-powered generative biology platform with the ability to more quickly create new and more effective drugs on demand. The company unveiled its cryogenic electron microscopy laboratory at IQHQ’s life science district in Andover in June 2023.

The CryoEM laboratory is one of the largest of its type in the U.S. It is equipped with four microscopes that provide detailed molecular visualization enabling scientists to see the structure of proteins too small to be seen with traditional microscopes. The lab and its data are enriching the Generate platform leading to advancements in therapeutic design and drug discovery.

READ ALSO: What’s Defining Office in 2025?

IQHQ, a life science REIT and real estate developer, acquired the approximately 201,500-square-foot campus at 4 Corporate Drive in the 495 Corridor between 2020 and 2021. The REIT paid Eisai $35.9 million in March 2020 for the two-building, 18-acre campus, according to CommercialEdge. In spring 2020, IQHQ signed two long-term leases at the multi-tenant campus with UMass Lowell and Ora Inc., an ophthalmic contract research organization and product development firm.

Located in the Merrimack Valley East submarket about 20 miles north of Boston, Innovation Park was completed in 1987 and renovated and expanded in 2006. IQHQ also updated the campus by adding a café with indoor and outdoor seating, a fitness center and common-area improvements. The office and lab property has two low-rise buildings and 671 parking spaces. With renovations, the campus is now a 340,000-square-foot life science hub for biotechnology companies and life science manufacturing companies.

Growing life science portfolio

IQHQ, which acquires, develops and operates life science districts throughout the U.S., has been growing its presence in hubs including San Francisco, San Diego and Boston. In Boston, the REIT’s properties and projects include 109 Brookline Ave., a 285,000-square-foot lab and office building near the Longwood Medical Area, which IQHQ acquired from Equity Commonwealth in February 2020. That same year, IQHQ acquired Alewife Park, a 290,000-square-foot life science campus in Cambridge, Mass., in a $125 million sale-leaseback deal.

In April 2021, IQHQ and Meredith Management broke ground on Fenway Center, a $1 billion life science campus in Boston that will include lab, office and ground-floor retail space totaling almost 1 million square feet of space.

Nearly a year ago, IQHQ has topped out Spur Phase One, a 330,000-square-foot life science building in South San Francisco, Calif. Completion of the eight-story development is anticipated early this year.

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Nationwide office visits closed out December 2024 at 39.2 percent below December 2019 levels—a bigger visit gap than that seen in November (37.6 percent), but a narrower one than last December’s 42.8 percent. 

Office visits in New York and Miami hovered around 20.0% below pre-pandemic levels. Atlanta (down 34.1 percent) and Dallas (down 35.2 percent) also outpaced the national average.

San Francisco finally pulled out of last place for year-over-five-year recovery—thanks in part to recent RTO mandates from local heavyweights like Salesforce.

Return-to-office mandates are once again the talk of the town, with companies from Amazon to AT&T set to crack down on remote work in the new year—in some cases, demanding that workers show up in person five days a week.

But how did the office recovery shape up in December 2024? We dove into the data to find out. 

December doldrums

December is typically a quiet month for offices, with many Americans taking time off for the holidays to enjoy vacations and family gatherings. So, it may come as no surprise that office visits in December 2024 dropped to their lowest point of the year. 

Compared to December 2019, office visits in December 2024 lagged by 39.2 percent—a bigger visit gap than that seen in either November (37.8 percent) or October (34.0 percent), as employees likely embarked on extended “workations” and enjoyed greater WFH flexibility during the holiday season. Put another way, December 2024 office foot traffic clocked in at 60.8 percent of pre-pandemic (December 2019) levels. 

Still, offices were busier this December than last—in December 2023, the recovery compared to December 2019 stood at just 57.2 percent.

New York, Miami, and … San Francisco?

New York and Miami once again led the regional return to office charge with year-over-five-year visit gaps of 19.6 percent and 20.9 percent, respectively—though both cities’ year-over-five-year numbers were weaker than those seen in either October or November.

Atlanta (-34.1 percent) and Dallas (-35.2 percent) also outperformed the nationwide average for year-over-five-year office foot traffic. And with Dallas-based companies like AT&T and Southwest Airlines starting to enforce stricter in-office policies in the new year, the Texas hub may experience even more accelerated recovery in the coming months. (AT&T also has a strong presence in Atlanta, which may also benefit from the company’s crackdown.)

Meanwhile, San Francisco, which has long lagged in post-pandemic office recovery, finally pulled out of last place in December 2024 with a year-over-five-year visit gap of 48.0 percent, just edging out Chicago. The impressive year-over-year office visit growth seen by the West Coast hub in recent months—likely fueled in part by Salesforce’s recent RTO mandate—appears to have finally left a tangible mark on the city’s year-over-five-year ranking. 

Year-over-year, visits to office buildings nationwide were up 6.4 percent in December 2024—showing that despite seasonal setbacks, office visits remain overall on an upward trajectory. Atlanta (13.7 percent) and Boston (12.1 percent) led the way for year-over-year office recovery, followed by Washington, D.C. (10.6 percent) and San Francisco (10.4 percent).

As additional RTO mandates go into effect in the new year, the office recovery needle may move once again. Will additional companies jump on the full-time in-office bandwagon—or will hybrid work models continue to dominate? 

Follow placer.ai’s data-driven office index reports to find out. 

This blog includes data from Placer.ai Data Version 2.1, which introduces a new dynamic model that stabilizes daily fluctuations in the panel, improving accuracy and alignment with external ground truth sources.

—Posted on January 29, 2025

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Office deals in Denver posted a 31.3 percent year-over-year drop, but the metro’s total office investment placed it among the top-performing U.S. markets, outpacing San Francisco. Meanwhile, even if the metro’s vacancy rate became one of the highest ones in the nation, Denver still closed some significant leasing agreements since the start of the year.

As of November, there were 680,961 square feet of office space under construction across seven properties, accounting for 0.4 percent of total stock—below the national rate of 0.8 percent. The figure was on par with that of Detroit’s and Phoenix’s, while it outpaced that of Portland’s (0.1 percent). When adding projects in prospective and planning stages, Denver’s rate reached 2.8 percent of existing stock—still below the national rate of 3.0 percent.

Notable office projects came online

In terms of office supply, Denver’s pipeline outpaced that of Phoenix’s (529,050 square feet), Charlotte (524,657 square feet), while Atlanta led across similar markets, with 1.7 million square feet. One of the largest office developments currently underway in the metro is Beacon Capital Partners’ Steel House, a 309,308-square-foot project in Denver’s Five Points submarkets. Construction on the 12-story project started in February 2023, with $100.2 million in construction financing by Bank OZK. The project is designed to received LEED Gold and WELL certifications.

Another notable development nearing completion is the 134,393-square-foot CV Innovation Campus, a life science project in Louisville, Colo. Developed by Koelbel & Co., the project is an adaptive reuse development of a former 1996-built Lowe’s store into life science and R&D space aimed for biotech and pharmaceutical companies.

Year-to-date through November, developers had broken ground in 690,666 square feet across six properties, while deliveries totaled nearly 1.3 million square feet across seven properties—accounting for 0.7 percent of existing stock and marking a 19.8 percent year-over-year growth.

A recently delivered project is the 726,450-square-foot 1900 Lawrence, a Class A+ high-rise in Denver’s central business district. Completed in August, the 30-story office tower was developed by Riverside Investment & Development and financed by a $242 million loan by Bank OZK. Currently marketed for lease by JLL, the property is considered the largest skyscraper delivered in Denver in four decades.

Denver’s potential for office-to-residential makeovers

As vacancies continue to increase in most markets, office-to-residential conversion emerged as a trend for office owners across the U.S. CommercialEdge launched The Conversion Feasibility Index, a new tool that evaluates which markets show strong office-to-residential repurposing fundamentals, based on a set of property-level scores.

Denver had 18 properties totaling 1.7 million square feet in the Tier I category, with CFI scores between 90 and 100 points. Meanwhile, 212 properties accounting for 22.1million square feet of space made up the Tier II category, with CFI scores between 75 and 89 points.

One example of an office-to-residential project currently underway is the 124,000-square-foot building at 4340 S. Monaco St., that was purchased by Shea Properties. The company started the adaptive reuse project, with plans to add 143 affordable residential units. Originally completed in 2001, the Class A four-story property has been vacant for the past five years.

A drop in office sales

Year-to-date through November, Denver investors traded $768 million in office assets, with 60 properties totaling 8.2 million square feet of space that changed hands at an average sale price of $119 per square foot—below the national average of $179 per square foot. Among similar markets, deals were pricier in Phoenix ($164 per square foot), Portland ($164 per square foot), Atlanta ($148 per square foot), while Denver prices per square foot outpaced the ones from Houston ($107 per square foot) and Dallas ($115 per square foot).

The total sales volume in the metro was 31.3 percent lower on a year-over-year basis and placed Denver 13th among the top 25 U.S. office markets, outpacing San Francisco ($747 million), Seattle ($687 million) and San Diego ($651 million). Among notable deals in Denver is the $45.5 million sale of TeleTech Headquarters, a 271,678-square-foot property in Englewood, Colo. CommonSpirit Health, a Catholic hospital chain, acquired the property at 9197 S. Peoria St. from TeleTech Services, with plans to turn it into a medical campus.

Another significant deal is the $31.2 million sale of Sisters Grove Pavilion, a 116,367-square-foot medical office building in Colorado Springs, Colo. Harrison Street and MedCraft Investment Partners bought the property from CommonSpirit Health in October.

Office vacancy continues to rise

As of November, Denver’s office sector had a 24.6 percent average vacancy rate, one of the highest rates in the nation, and marking a 320-basis-point increase over the same period of last year. While the national rate was set at 19.4 percent, Atlanta and Phoenix were the similar markets with lower vacancy rates, with 17.8 percent and 18.4 percent, respectively.

Significant deals in the metro include Bet365’s 120,000-square-foot lease at One Platte, a 250,000-square-foot building owned by Nichols Partnership and Shorenstein. The U.K.-based sports betting firm opened its new U.S. corporate headquarters at the property in October, with the move expected to bring nearly 1,000 jobs in the area.

In May, Brookfield Properties signed a 121,000-square-foot renewal agreement at 717 17th St., a 693,565-square-foot property in downtown Denver. The tenant is Johns Manville, a Berkshire Hathaway subsidiary that will continue to use the space as its global headquarters through at least 2035.

A high share of flex office space

As of November, Denver’s coworking sector reached 3.7 million square feet of space, representing 2.2 percent of total leasable office space—above the national figure of 1.9 percent.

The largest flex office provider in Denver remained Regus, with operations totaling 694,250 square feet of space. The company was followed by WeWork (307,846 square feet), Expansive (229,867 square feet), Spaces (180,252 square feet) and Office Evolution (155,916 square feet).

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In the last quarter of 2024, office sales totaled $9.1 billion with 365 transactions closing, totaling 46.9 million square feet, according to the latest CommercialEdge data.

When compared to the previous quarter, there was a 37.1 percent decline in sales count nationally and a 25.3 percent drop in square footage. During the third quarter of 2024, there were 580 deals involving 62.8 million square feet. In terms of dollar amount, the last quarter showed a 9.9 percent decline in office sales volume when compared to the $10.1 billion recorded in the third quarter.

READ ALSO: What’s Defining Office in 2025?

Nevertheless, the average sale price per square foot recorded a 32.1 percent increase—jumping from the $174.03 in the third quarter to $229.93 in the last three months of 2024. Prices showed a consisted upward trend throughout the past year, despite a decline in overall sales count.

Year-over-year comparisons also show a decline in office investment activity. The last quarter of 2023 ended with $11.2 billion across 612 office sales—representing an 18.7 percent drop in sales volume and a 40.3 percent decline in transaction count, according to CommercialEdge. The same trend is reflected in square footage: in 2023’s last quarter 63.6 million square feet changed hands, marking a 26.2 percent drop when compared to the same period in 2024.

Fewer office sales transpired in 2024

In terms of annual deal volumes, 2024 ended with 214.3 million square feet trading across 1,971 transactions. Last year’s square feet transacted showed only a 1.1 percent drop when compared to 2023’s 216.8 million square feet, while it reflects an approximately 9.1 percent drop in sales count when looking at the 2,168 office deals recorded in 2023.

Last year’s total office transaction volume reached $35 billion, showing a 7.4 percent decline when compared to the $37.8 billion recorded in 2023.

—Posted on January 28, 2025

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In the largest office lease ever recorded in Miami’s Wynwood submarket, Amazon agreed to occupy 50,333 square feet at Wynwood Plaza, a 1 million-square-foot mixed-use development.

L&L Holding Co. and Oak Row Equities are the owners. Shorenstein Investment Advisers is the project partner, while Claure Group serves as co-investor.

Cushman & Wakefield assisted the landlord in the deal, alongside with in-house representation, while Savills worked on behalf of the tenant.

Located at 95 NW 29th St., Wynwood Plaza is taking shape 6 miles from downtown Miami and will have access to interstates 95 and 195. Miami International Airport is some 8 miles west.

READ ALSO: What’s Defining Office in 2025?

Miami’s office vacancy rate at the end of December clocked in at 15.2 percent, posting the lowest rate among the top U.S. markets, the latest CommercialEdge office report shows. Despite a 110-basis-point increase, the metro’s figure was lower than the 19.8 percent national average.

A mixed-use campus in Miami’s Art District

The mixed-use campus broke ground in March 2023, after the developer secured a $215 million construction loan from Bank OZK. The project is scheduled for completion in the following months.

Wynwood Plaza will comprise a 12-story Class A, 266,000-square-foot office building and a residential component that will feature 509 luxury rental apartments. The property will also include 25,000 square feet of retail and a 26,000-square-foot outdoor public plaza.

The office component will have various amenities such as a fitness center, a cafe and bar lounge, rooftop private seating areas and conference spaces. Floorplates will range from 23,756 to 25,205 square feet.

L&L Holding Co. Vice President Bryan Lapidus, together with Cushman & Wakefield Managing Director Andrew Trench, Senior Director Edward Quinon and Vice Chairman Brian Gale, worked on behalf of the landlord. Savills Executive Managing Director Tom Capocefalo and Vice Chairman Mike Catalano represented the tenant.

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The national office vacancy rate in December saw a modest year-over-year increase of 1.5 percent when compared to December 2023, reflecting ongoing challenges in the sector, CommercialEdge data shows. Last month, office vacancy reached 19.8 percent.

The year-over-year vacancy changes underscore how geographic nuances continue to shape office market performance, with rising rates in tech-heavy and coastal markets standing in stark contrast to more stable conditions in the Sun Belt and select Midwestern cities.

Among individual markets, Austin recorded the sharpest rise, with a staggering 6.9 percent year-over-year increase, highlighting the market’s struggle to align rapid office development with evolving tenant requirements. Similarly, the Bay Area and Portland, Ore., reported a significant increase of 6.2 percent, reflecting pressure on tech-driven markets as hybrid work models persist.

On the East Coast, Philadelphia (5.2 percent) and Boston (5.1 percent) emerged as key hotspots for rising vacancies, illustrating the uphill recovery faced by urban core markets with high costs and extensive inventories. Among gateway markets, San Francisco (5.2 percent) continued to grapple with post-pandemic recovery.

Moderate, but steady vacancy increases

Meanwhile, several Sun Belt and Midwestern markets reported modest vacancy increases. Dallas-Fort Worth (3.8 percent), Atlanta (1.8 percent), Miami (1.1 percent), Nashville, Tenn., (0.9 percent), Chicago (0.7 percent) and Phoenix (0.4 percent) demonstrated resilience compared to their coastal counterparts.

At the same time, vacancy rates in Manhattan increased just slightly, with a 0.2 percent year-over-year bump. Notably, Denver (2.5 percent) and Tampa- St. Petersburg-Clearwater (3.0 percent) showed stable but rising vacancies, indicating balanced demand and supply dynamics.

—Posted on January 28, 2025

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Carr Workplaces has reopened its coworking location at 300 New Jersey Ave. N.W. in Washington, D.C. The space was subject to a complete makeover following a lease renewal.

The company has provided flex office spaces at the property since 2011, where it occupies 27,500 square feet, CommercialEdge shows.

CSO Architects oversaw the designs for the new workspace, located on the building’s third floor. Amenities include an expanded reception and social hub, a library, a wellness space, conference rooms, as well as exclusive catering and beverage services.

READ ALSO: Coworking Spaces Surge Amid Changing Demand

Last year in November, Carr Workplaces signed a 26,331-square-foot lease with Comstock Holding Cos. The new flex office location is scheduled to open this spring at The Hartford, in Arlington, Va., expanding the company’s Mid-Atlantic footprint.

Part of America’s Square on Capitol Hill

The property came online in 2009 and it has been under Jamestown ownership since 2015, when the company acquired it from Dweck Properties, according to CommercialEdge. The asset is part of America’s Square office complex, located one block away from the Senate Office Buildings, the Supreme Court and U.S. Capitol.

The Class A, 10-story 255,904-square-foot building has a LEED Gold certification. The property features 26,000-square-foot floorplates, four passenger elevators, 252 car parking spaces and 4,000 square feet of retail. The tenant roster includes American Council of Life Insurers and United Soldiers and Sailors of America, the same source shows.

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Even as it frees up hundreds of millions in immediate cash, the transaction provides AT&T with the ability to safeguard critical network infrastructure in the currently underused facilities—and the ability to share in future profits from redevelopment of the properties.

The underutilization of these properties, which span 23 states, arises from the evolution of telecom technologies. These central offices were originally designed for legacy copper networks, which have increasingly moved to more compact fiber and wireless technologies, saving energy and also freeing up space for other uses.

READ ALSO: Office Sector Decline Continues Amid Flexibility Shift

AT&T will retain and leaseback only as much space in these facilities as it currently needs for its network, maintaining exclusive operational control of those spaces and also retaining the right to approve any redevelopment plans. The company intends to exit the large majority of its legacy copper network operations by the end of 2029.

AT&T emphasized that this deal affects just a small portion of its portfolio of central offices and will affect neither jobs nor customers.

In 2021, the firm executed a smaller but similar transaction with Reign Capital, involving 13 properties totaling more than 3 million square feet and generating more than $300 million in upfront cash.

AT&T spokesperson Jeff Kobs told Commercial Property Executive that details on the specific locations are not being disclosed at this time.

He continued, “As far as redevelopment space, it comes down to a location-by-location basis. The properties in this transaction have on average under 35 percent utilization today. This deal is designed for utilization to decrease over time based on our operational needs at each location. At lease end, AT&T will retain a portion of space needed for ongoing network operations. This includes maintaining exclusive operational control in perpetuity for that space.”

Kobs added briefly that the onus will be on Reign Capital to decide how best to redevelop the spaces that are available and propose those opportunities to AT&T. Reign Capital did not reply to CPE’s request for comments.

Distinctive, but repeatable

Scott Merkle is a managing partner with SLB Capital Advisors, New York, which specializes in sale-leasebacks. He shared with CPE some observations about the AT&T/Reign transaction. 

Merkle started by noting that while most sale-leasebacks have “a plain vanilla structure” under which the acquirer obtains ownership of real property in return for a steady income stream from the selling business, this one is different.

“AT&T’s deal features a sweetener where they received not only $850 million at closing, but structured an ability to participate in any property repositioning driven by the acquirer, Reign Capital.”

He also added that telecom companies have thousands of old central office locations and that while AT&T is selling 74 properties totaling more than 13 million square feet, they represent “only a small portion of its central office property portfolio.”

Similarly, although $850 million is significant in terms of CRE redevelopment, it’s a drop in the bucket for AT&T, which has more than $300 billion of enterprise value.

Finally, Merkle zeroed in on a comment in the AT&T announcement, that this deal structure “serves as a template for potential future transactions for some locations in AT&T’s footprint…” He therefore would not be surprised to see more deals like this from AT&T down the road as it continues to transition away from copper network technology.

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Construction giant HITT Contracting has broken ground on a new headquarters building, a 270,000-square-foot structure in Falls Church, Va., which is part of metro Washington, DC. Completion is slated for early 2027.

Designed by architectural firm Gensler, the six-story building at 7125 W. Falls Station Blvd. will be largely office space for HITT, featuring collaborative work zones, wellness facilities and a 1-acre outdoor terrace. In its vicinity will be more than 55,000 square feet of urban parks, along with a 1,400-square-foot interactive digital experience pavilion designed to be a gathering place for locals.

The ground floor will feature a full-service conference center, café, and access to urban parks. The building’s second floor will feature various employee amenities, collaboration spaces, and access to the roof deck. Four additional floors of offices will also offer workspaces designed with neurodivergence in mind to support a variety of working styles.

READ ALSO: 2024 Employment Picture

HITT headquarters will also feature a 40,000-square-foot research lab developed in partnership with Virginia Tech’s Coalition for Smart Construction. HITT is a founding partner of the coalition, which is a university and industry collaboration that will engage with federal and state agencies with the goal of driving innovation in the construction sector.

The headquarters will aim to achieve LEED Platinum certification and meet net-zero energy and net-zero carbon goals. Among other features toward that end, the building will be powered by a 100,000-square-foot photovoltaic solar canopy and wind turbines, offsetting all its energy needs.

A HyperWall building envelope system, developed with building composites, will offer a stronger and more efficient construction, HITT notes. Other sustainable elements will include a power over ethernet system for lighting, power and data. Office furniture in the building will be produced from recycled materials from HITT’s 3D printing farm.

Research projects at the new HQ

HITT is one of the 20 largest contractors in the U.S., with 2024 projected revenues of $8.4 billion. The company employs nearly 1,900 workers across 14 office locations and job sites nationwide.

HITT’s R&D division will carry out more than 20 research projects at the new headquarters, according to the company. Notable ventures already in progress, which will continue at the new facility, include the development of a newly patented prefabricated building skin that reduces weight and increases speed to market.

The contractor is also pioneering the first use of the Caracol Heron AM robotic arm installed in the U.S. for 3D printing. That technology is aimed to augment traditional construction methods, as part of a larger effort to use robotics on-site.

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IBM has inked a 15-year, 92,663-square-foot lease expansion at SL Green Realty Corp.’s One Madison Avenue in Manhattan. The agreement covers the property’s entire seventh floor, for which the asking rent was $110 per square foot, the Commercial Observer reported.

JLL’s Vice Chairman Patrick Murphy and Vice President Winston Schromm arranged the deal on behalf of IBM. SL Green was represented by JLL Vice Chairmen Paul Glickman and Alex Chudnoff, together with Executive Managing Director Ben Bass and Senior Vice President Diana Biasotti.

In 2022, IBM signed a 16-year, 270,000-square-foot lease at One Madison. The five-story office space opened September of last year.

SL Green acquired One Madison from MetLife Real Estate Investment in 2005. The 1.4-million-square-foot property traded for $801.7 million, according to CommercialEdge information. Last month, SL Green and its joint venture partners finalized a $1.25 billion mortgage modification and extension for the property, extending the final maturity date through November 2027.

A major adaptive reuse project

Originally built in 1893 to designs by Napoleon Le Brun & Sons, One Madison rises 26 stories in Manhattan’s Midtown South. SL Green, in a joint venture with National Pension Service of Korea and Hines, completed the property’s $2.3 billion redevelopment in September 2023. Architect Kohn Pedersen Fox oversaw the renovation, aiming to achieve LEED Gold certification. Amenities include an HVAC system that circulates 100 percent fresh air and a 7,000-square-foot tenant-only lounge, as well as several eateries and retail spaces.

One Madison’s tenant roster features Franklin Templeton, Coinbase and Palo Alto Networks, according to CommercialEdge. With IBM’s expansion, the office building is now 72 percent leased.

The office high-rise is across the road from Madison Square Park and the 23rd Street subway station and within a half mile of the Flatiron Building and Empire State Building.

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Law firm Jackson Walker LLP has extended and expanded its office footprint at Masaveu Real Estate’s KPMG Plaza in Dallas to a total of 147,915 square feet. Under the new lease, the company will occupy nearly six floors at the 500,000-square-foot property. Stream Realty Partners represented the owner, while CBRE negotiated on behalf of the tenant.

Jackson Walker relocated to KPMG Plaza upon its 2015 completion and became one of the building’s anchor tenants. The roster also includes Bell Nunnally & Martin LLP, UMB Bank and KPMG.

A Class A office building in Dallas

Masaveu acquired the Class A mid-rise in 2019 for $240 million from Civitas Capital Group, according to CommercialEdge information. A $111.7 million loan originated by Wells Fargo Bank financed the transaction.

Located at 2323 Ross Ave. in Dallas’ Arts District, the 18-story building features 26,000-square-foot floorplates and 20,000 square feet of retail space. Amenities at the LEED Gold-certified property include a fitness center and covered parking, as well as 24-hour security.

KPMG Plaza is near Interstate 345 and Highway 366, adjacent to a luxury hotel and within walking distance of Klyde Warren Park.

Stream Managing Director Matt Wieser, Executive Vice President J.J. Leonard and Senior Vice President Marissa Parkin worked on behalf of the ownership. CBRE Vice Chairman Phil Puckett and former Vice Chairman Jeff Ellerman—now Executive Vice Chairman at Stream—represented Jackson Walker.

Earlier this week, Stream became the exclusive leasing agent for Piedmont Office Realty Trust’s office campus in Irving, Texas. Leonard is part of that brokerage team as well.

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BlackRock extended its obligation for all of the third and fourth floors, part of the fifth floor, and some ground floor space, while relinquishing half of the fifth floor. BlackRock has been a tenant in the building since 2010.

1 University Square Drive is a five-story, 330,000-square-foot Class A office building with a two-story atrium lobby, a full-service cafeteria with private catering, a media/conference room with seating for 48 and a fitness center with locker rooms and sauna. The 18.5-acre campus has extensive amenities that include newly revamped landscaping with a walking trail; bocce, basketball and pickleball courts; electric car charging stations; and a community garden. 

The property was completed in 2008 and is midway between Philadelphia and New York City along Princeton’s Route 1 Corridor. It’s less than 2 miles from downtown Princeton and has easy access to the Princeton Junction train station with AMTRAK/NJ Transit/Conrail serving the Northeast corridor.

READ ALSO: When Office Meets Hospitality

The JLL leasing team for 1 University Square Drive includes Executive Managing Director Tim Greiner, Managing Director Tom Romano, Senior Vice President Vinny DiMeglio, Vice President Mike Pietrowicz and Executive Vice President Jonathan Ortiz. BlackRock was represented in the transaction by JLL Chairman & President, New York Region, Peter Riguardi; Vice Chairman Matt Astrachan; Managing Director Nicole Tiger; Executive Vice President George Gemelos; and Associate Vice President Hannah Bernstein.

Other tenants in the building include engineering and environmental services firm Langan and investment consulting firm Mercer.

A JLL spokesperson stated that BlackRock’s return of 33,900 square feet (about 16 percent of the building’s total office space) to the landlord next summer will bring the building to an overall vacancy of 64 percent.

“This is a relatively small ‘post-Covid’ adjustment, compared to other companies that have right-sized their operations from leases executed before the pandemic,” Greiner told Commercial Property Executive. “Office tenants in general have embraced strategic real estate planning to streamline their operations and embrace new work models. This trend not only enhances efficiency and cost savings, but can also add much-needed high-end sublease space into the market, providing other tenants with greater access to premium office environments. The result is a more dynamic and flexible leasing landscape that supports evolving workplace needs.”

No shortage of downsizing

Speaking of downsized leases, last September Nuveen Real Estate signed Dr. Reddy’s Laboratories for 53,000 square feet at 600 College Road E. in Princeton Point, a two-building, 440,000-square-foot office campus in Princeton, N.J. The deal was arranged by Cushman & Wakefield.

The transaction was a relocation and downsize for the generic-drug maker’s North American headquarters. Princeton Point is part of Princeton University’s 2,000-acre master-planned business and research campus.

Overall vacancy in New Jersey’s office space market peaked in mid-2024 at 27.3 percent, but had slipped slightly by year’s end, “as tenants signed leases for higher-end workspaces and sublease availabilities trended lower,” according to a fourth-quarter report from JLL. Almost 500,000 square feet was absorbed in the fourth quarter, with the biggest share of that leasing coming from the legal sector.

The report foresees ongoing stabilization of New Jersey’s office sublease market, accompanied by downward pressure on overall vacancy.

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The buyer was not identified. Paramount will retain the 55 percent controlling interest and continue to manage and lease the property located between East 54th and East 55th streets in the Plaza District submarket.

The deal strengthens the New York City-based office REIT’s balance sheet and gives the firm flexibility in its capital allocation strategy.

Paramount, which owns, operates, manages and redevelops high-quality Class A office properties in select New York City and San Francisco submarkets, acquired the tower from The Carlyle Group in November 1999 for $163.2 million, or about $274 per square foot, according to CommercialEdge data. The latest transaction values the property at about $350 per square foot.

Building highlights

The LEED Gold-certified building was designed by Cesar Pelli, Viñoly Design Architects and Emery Roth and Sons and completed in 1983. The tower has 44,000-square-foot floorplates, exceptional light and views, as well as a superior location that provides access to eight subway lines and Grand Central Terminal.

The multi-tenant building has an 83 percent occupancy rate and 237,680 square feet of office space available, according to CommercialEdge. The property also has 14,805 square feet of retail space on the first floor and the underground level.

READ ALSO: What’s Defining Office in 2025?

Current tenants include Littler law firm, White Oak Healthcare Finance, FirstKey Mortgage, Zweig-DiMenna Associates, Carl Marks Management Co., Bank of America, Virtu Financial, Bank Negara Malaysia, Amber Capital Investment Management and RE Loewenberg Capital Management, according to CommercialEdge data.

Manhattan office market moves

Paramount had planned to sell the building several years ago but a deal with Aby Rosen’s RFR Realty to buy the tower for about $400 million fell apart in early 2020 as the COVID-19 pandemic hit America, shutting down all offices across the nation. Since then, Manhattan, like many U.S. office markets, has struggled to regain its footing and property values for many office buildings have declined.

But there are signs of improvement in the Manhattan office market and Paramount believes the sale of the non-controlling interest in 900 Third Ave. underscores the underappreciated value of the asset.

Tenants continue to flock to high-quality, newly built or recently redeveloped towers. In November, SL Green Realty Corp. closed on the sale of an 11 percent interest in One Vanderbilt, the 1.7 million-square-foot skyscraper in Midtown Manhattan, to Mori Building Co. Ltd. The deal valued the tower at $4.7 billion. SL Green maintained a 60 percent stake in the skyscraper that is now fully leased. The property’s other owners include the National Pension Service of Korea and Hines.

Cushman & Wakefield reported office leasing ended 2024 on a strong note with fourth-quarter new leasing totaling 6.7 million square feet—the highest quarterly total since the third quarter of 2022 and 6.3 percent higher than the 10-year quarterly average. The fourth-quarter Manhattan office report also stated there were 23 new and expansion leases greater than 100,000 square feet, up from 16 in 2023.

In the largest lease of the fourth quarter, Bloomberg LP inked a renewal and expansion lease at SL Green’s 919 Third Ave., a 1.5 million-square-foot, 47-story office tower. The deal brings the global publisher’s footprint to 924,876 square feet at the Midtown Manhattan high-rise. Bloomberg agreed to a 749,035-square-foot, 11-year lease extension starting March 1, 2029, and a new 175,841-square-foot 15-year expansion.

The post Paramount Sells Stake in NYC Tower appeared first on Commercial Property Executive.

It was raining executive orders on President Donald Trump’s first day in office. It remains to be seen just how much many of these—like exiting the Paris Agreement, freezing pending regulations and creating an agency to collect tariffs—will impact commercial real estate investment and finance.

There is one directive from our returning leader, however, that should have a direct and powerful impact on CRE investment and finance. That is the “Return to In-Person Work” order for executive branch employees (understood to mean all federal workers).

At just 65 words, the order packs a positive punch for the Washington, D.C. and national office markets, which have been dismantled by remote and hybrid work following the pandemic.

READ ALSO: 5 Promising Opportunities in an Uncertain Market

By November, utilization in the District had recovered to 60 percent of pre-COVID levels, according to Placer AI. The average for the top 12 office markets is 62.9 percent. The office vacancy rate is 22.5 percent, according to CBRE, while the national average is 19 percent. So, there is definitely room for improvement.

Following the enactment of Trump’s order, District buildings—and the surrounding streets, stores and hotels—should be filled with more occupants and visitors, and some older buildings that seem destined for obsolescence could regain some of their potential as office space.

It should be noted Trump and Elon Musk, who leads the newly created Department of Government Efficiency, are actually eager to shrink and decentralize the Federal workforce. In fact, Musk has said he hopes the Return to In-Person Work executive order for government employees will set in motion a wave of voluntary resignations.

Meanwhile, during the past few years, the GSE has been “optimizing” and rightsizing” its footprint, in part, by selling about 5 million square feet of excess properties across the country—three of the 31 properties sold or for-sale are in Washington, D.C. It has also been reducing its lease commitments due to the increase in remote and telework post-pandemic.

A smaller, consolidated Federal workforce would hurt the Washington, D.C. office market. But the impact of Trump’s executive order can extend way beyond Washington and government offices. With the federal government requiring a complete return to work by its workers, private employers of all sizes—the big ones are already starting to fall in line—will likely be emboldened to require the same, thereby weakening if not reversing the work-from-home trend.

“That by itself is enough to start making office more viable,” Lonnie Hendry, chief product officer at Trepp Inc., told me in a conversation last year.

More bodies in the office means better fundamentals for office, more investment and financing and less distress.

Efficiencies in the office

According to the American Federation of Government Employees, the largest union for federal employees, 54 percent of federal employees work at completely in-person jobs and 10 percent are fully remote. Among the subset of federal workers who are telework but not remote work eligible, 61.2 percent of working hours are spent in-person.

How does that compare to the broader population? According to the Bureau of Labor Statistics, about 23 percent of American workers were teleworking or working from home in December of 2024.

But remote work and telework for Federal workers cannot be attributed to COVID alone. Following the executive order, AGFE issued a statement saying restricting telework would undermine the “effectiveness” of the federal workers since it was Congress in 2010 that required telework for the sake of efficiency.

It will be interesting to see how Trump’s return to the office executive order plays out for Federal employees and the buildings they occupy, but even more interesting to see the effect it has on the broader workforce. Stay tuned!

The post Capital Ideas: Trump’s Gift to the Office Market appeared first on Commercial Property Executive.

The campus is BeiGene’s U.S. flagship facility and its first U.S. manufacturing site. The other two are in Guangzhou and Suzhou, China. The company does have several U.S. offices in Cambridge, Mass.; Ridgefield, N.J.; Fulton, Md.; San Mateo, Calif.; and Emeryville, Calif.

IPS-Integrated Project Services LLC, a provider of engineering, procurement, construction management and validation services, and Meyer, a national architecture and design firm, played integral roles in the development and delivery of the three-year Hopewell project that expands BeiGene’s integrated manufacturing and research and development footprint in the U.S.

READ ALSO: Life Science Trends to Watch in 2025

Located on a 42-acre property at the 433-acre Princeton West Innovation Campus, the state-of-the-art facility provides flexibility for BeiGene to scale production of its cancer medicines. The company aims to create hundreds of new high-tech jobs at the site by the end of 2025.

The campus features the most advanced technology in the biopharmaceutical industry with the ability to expand to 1 million square feet over time. The end-to-end manufacturing capabilities create cost, speed and technology advantages as well as supply chain resiliency.

As lead architect, IPS led the design and delivery of the campus, including the biopharmaceutical manufacturing and utilities facilities as well as critical technical systems. The company also ensured the project met strict regulatory requirements.

Meyer provided ground-up architecture and interior design services along with overall campus design support for the 100,000-square-foot office and lab building, cafeteria and on-site café. The new facility combines office and lab functions. It also includes critical mechanical and utilities systems needed to support BeiGene’s clinical R&D capabilities.

Other project partners included developer Lincoln Equities Group, structural engineer Mainstay Engineering Group, civil engineer Van Note-Harvey Associates and construction manager DPR Construction.

Centrally located campus

BeiGene acquired the site from Lincoln Equities Group in November 2021 and broke ground on the project in April 2022. Lincoln Equities Group and H.I.G. purchased the Princeton West Innovation Campus in 2020 from former owner, Bristol-Myers Squibb, which had made more than $500 million in capital improvements before the sale.

The Mercer County campus is centrally located between New York City and Philadelphia less than 5 miles from Interstate 295, which provides access to Interstate 95. The campus has more than 30 buildings including biological product development and clinical manufacturing facilities, R&D assets, office buildings, a data center, a conference center, a fitness center, a child development center and parking garage.

In addition to BeiGene, other companies located at Princeton West Innovation Campus include Enzene Biosciences, Gennao, GenScript ProBio and PTC Therapeutics. The campus has space available for lease as well as development rights and build-to-suit opportunities.

New Jersey’s top life science market

One of the top 10 life science clusters in the U.S. as ranked by JLL, New Jersey’s market includes more than 12 million square feet. Of the top 20 pharma companies, 14 are located in New Jersey and eight of the top 10 R&D companies are also in the state, according to Newmark’s third-quarter life science market report for Northern New Jersey. The report noted demand for available lab space exceeded 1 million square feet as of late last year.

Several significant life science deals have been announced at other New Jersey life science campuses in recent years  In November, Revlon chose a 62,000-square-foot space at The Northeast Science and Technology Center in Kenilworth, N.J., for a science and innovation lab. NEST is a 100+acre campus dedicated to research and development innovations owned by a joint venture of Onyx Equities and Machine Investment Group. The JV acquired the campus from Merck, which moved out of all the campus buildings except one. Revlon said the facility’s existing lab infrastructure played a key role in its decision to lease space at the NEST.

Meanwhile, HELIX Health + Life Science Exchange, a 4-acre innovation district built by SJP Properties and New Brunswick Development Corp. near Rutgers University in downtown New Brunswick, N.J., is scheduled for delivery in the third quarter of 2026. The 1.2 million-square-foot project will house the New Jersey Innovation HUB and Rutgers Robert Wood Johnson Medical School.

The post IPS, Meyer Complete $800M Biopharma R&D Project appeared first on Commercial Property Executive.

BioMed Realty has topped out 585 Kendall, a 637,000-square-foot life science building in Cambridge, Mass. Development partners include CBT Architects, Suffolk Construction, Takeda and Global Arts Live.

The developer broke ground on the project in October 2022 and last year took out a $683.1 million construction loan from Sumitomo Mitsui Bank, according to CommercialEdge information. Completion is scheduled for next year.

Takeda Pharmaceuticals already preleased the development’s 600,000-square-foot office and lab space. The company will establish a dedicated research and development facility at the property. However, Takeda’s suburban campus will remain in Lexington, Mass., at 95 Hayden Ave.

READ ALSO: Boston Office Vacancy Up, Deliveries Higher

Located at 585 Kendall St., the proposed LEED Gold-certified building is taking shape less than 4 miles from downtown Boston and Boston Logan International Airport. The 16-story structure is also adjacent to Kendall Square.

When complete, the mid-rise will also include a 30,000-square-foot performing arts center with a 400-seat space, as well as flexible multipurpose rooms for workshops and meetings and an indoor garden developed in partnership with Global Arts Live.

Boston’s growing life science inventory

Boston leads nationally for life science construction activity, according to CommercialEdge research. Between 2019 and October 2024, almost 16.9 million square feet were underway in the market across 60 projects. In 2024 alone, more than 680,000 square feet of life science space broke ground, while deliveries amounted to 2.8 million square feet.

Last year, The Davis Cos. and Invesco Real Estate completed the second phase of The Quad, a 554,019-square-foot life science campus also in Cambridge. Scheduled to break ground this spring, the last phase will comprise 280,000 square feet.

The post BioMed Realty Tops Out Boston Life Science Building appeared first on Commercial Property Executive.

Developments and completions in metro Houston were below national figures as well. About 1.8 million square feet were under construction as of November, accounting for 0.7 percent of total stock. In terms of deliveries, less than 1.4 million square feet came online in the first eleven months of the year.

The metro’s investment volume remained steady, registering $940 million during the same period. However, assets traded well below the $179 per square foot national threshold, also due to several foreclosures in the metro.

Developments and completions remain below national figures

As of November, Houston’s underway pipeline consisted of almost 1.8 million square feet. This accounts for 0.7 percent of the metro’s total stock, faring better than Washington, D.C. (0.4 percent) and Phoenix (0.4 percent), but slightly below the 0.8 percent national index. Boston (3.6 percent) and Nashville (3.6 percent) had the largest share of under-construction space out of total inventory.

The market’s share of office space in the development and planning phases stood at 1.9 percent of existing stock, still under the national figure (3.0 percent). Atlanta (2.3 percent), Dallas (4.9 percent) and Austin (12.9 percent) were some of the more active metros.

One of the largest projects underway in Greater Houston is Building 5 within the South Campus Research. The University of Texas System is developing a seven-story, 600,000-square-foot office and research facility, expected to come online in the third quarter of 2027.

In terms of completions, Houston’ office sector saw roughly 1.4 million square feet coming online year-to-date as of November, accounting for 0.5 percent of its total stock. This figure was also lower than the national average, which stood at 0.6 percent, and represented an almost 50 percent drop year-over-year.

Among other major markets, the metro fared betted than Denver (1.3 million square feet) and Phoenix (646,629 square feet) but trailed behind Austin (2.1 million square feet) and Dallas (2.8 million square feet).

Earlier this year, Skanska completed 1550 on the Green, a 28-story, 382,000-square-foot office building in the city’s downtown. The high-rise is LEED Platinum-certified and has ground-floor retail space.

Office-to-residential conversions gain traction

Last year, CommercialEdge introduced the Conversion Feasibility Index, a tool powered by Yardi designed to evaluate the potential of converting office buildings into multifamily residences. As the trend of office-to-residential adaptive reuse gains traction, the CFI offers crucial insights for investors.

While Texas metros may not rank among leading U.S. markets for repurposing buildings, Houston currently has 152 office properties—totaling 24.9 million square feet—with a score higher than 75, placing them as Tier I and II candidates for potential conversions.

Earlier this year, DeBartolo Development completed the $100 million office-to-residential conversion of 1801 Smith Street, a 20-story office building in downtown Houston which had a CFI score of 86, indicating that the asset bore strong conversion potential. Dubbed Elev8, the residential property now features 372 luxury units.

Additionally, the company is currently working on another adaptive reuse project: the conversion of a 19-story office high-rise totaling 827,596 square feet. Upon completion, the development will generate 311 apartments.

More Houston assets doomed to foreclosure

Houston’s office investment volume year-to-date as of November clocked in at $940 million. The metro was surpassed by markets such as Austin ($990 million) and Atlanta ($1.1 million), while Denver ($768 million) and San Francisco ($747 million) were at the opposite pole.

Assets traded at $107 per square foot on average, well below the $179 national figure. Manhattan ($379 per square foot) remained the most expensive market, followed by Washington, D.C. ($213 per square foot) and the Bay Area ($293 pe square foot).

In November, The National Bank of Kuwait sold the Twentyfour25 Galleria for $27 million, after it foreclosed on the 285,000-square-foot office building. The previous owner, an entity associated with Jetall Capital, defaulted on a $51.7 million loan.

Earlier this summer, Interra Capita Gorup acquired The Esperson Buildings, two properties spanning 600,000 square feet, following foreclosure. The firm paid $12 million for the assets, previously owned by Contrarian Capital Management.

Houston’s vacancy rate decreases year-over-year

Houston’s office vacancy rate at the end of November clocked in at 24.3 percent, a 120-basis-point decrease year-over-year. Despite the drop, the metro’s share of available space was considerably larger than the 19.4 percent national figure.

Among other secondary markets, Austin (27.7 percent) fared worse, while Dallas (23.0 percent) and Atlanta (17.8 percent) performed better.

In September, Enterprise Products Partners signed a 23,537-square-foot leasing agreement with Frost Brown Todd at its 1.3 million-square-foot 1100 Louisiana St. The legal counselors will occupy a full floor at the high-rise.

Greater Houston’s listing rates as of November reached $30.2, posting a 0.8 percent growth year-over-year. This figure was also below the $32.9 U.S. index, but closer to peer metros Dallas ($30.5) and Nashville ($31.0).

Coworking inventory remains constant

Houston’s office shared space inventory as of November totaled 4.5 million square feet across 229 locations. This accounted for 1.8 percent of the market’s total inventory, slightly below the 1.9 percent national rate.

The metro’s inventory was on par with Dallas, but surpassed Philadelphia (1.5 percent) and Austin (1.7 percent). Miami remained in the lead, with 3.7 percent of its total stock designated as coworking space.

Regus remained the largest coworking operator in the metro, with 574,106 square feet across 34 properties. The Cannon (444,341 square feet) and Workstyle Flexible Offices (372,169 square feet) rounded up the top three.

The post Houston Office Figures Lag Behind National Metrics appeared first on Commercial Property Executive.

JPMorgan Chase has signed a renewal and expansion agreement totaling 280,000 square feet in San Francisco’s Financial District, the San Francisco Chronicle first reported.

The company will expand its footprint at Hines’ 560 Mission St. building by 60,000 square feet for the next five years.

The deal comes as the company is asking its employees to return to the office five days per week. The expansion will also also enable JPMorgan Chase to relocate some of First Republic Bank’s former employees to 560 Mission St.

Following JPMorgan Chase’s takeover of First Republic Bank, which occupied 750,000 square feet of office space in downtown San Francisco until 2023, the company is now focusing on consolidating its workforce from the former bank’s space at 1 Front St. to the expanded office space in the Financial District.

First Republic Bank occupied some 460,000 square feet at Paramount Group’s 1 Front St., of which JPMorgan Chase initially agreed to keep some 300,000 square feet. In 2024, JPMorgan downsized its space there once again, marketing for lease another 244,000 square feet, according to The Real Deal.

The Class A office building at 560 Mission St., also known as the JPMorgan Chase Building, totals 667,782 square feet. Other tenants here include Ernst & Young, which occupies 122,760 square feet, as well as Seyfarth Shaw, Munger, Tolles & Olson and Arup, according to CommercialEdge. It is close to multiple bus and light rail stops that allow easy access to the Union Square area and to downtown San Francisco, while being 13 miles from San Francisco International Airport.

Hines developed the 420-foot-tall office tower in 2002 and has since continued to own and operate the asset. Rising 31 stories, the high-rise includes 21,698-square-foot floorplates, 5,000 square feet of retail space and 117 vehicle parking spots. The amenity package includes on-site food and beverages services, events, access to an outdoor plaza, dry-cleaning services, valet parking and EV charging stations.

San Francisco’s office market shows mixed signals

Despite being among the priciest office markets in the U.S., San Francisco recorded one of the highest vacancy rates in the nation, according to a recent CommercialEdge report. The metro had a 28.2 percent vacancy rate as of November last year, marking a 400-basis-point increase year-over-year, far outpacing the 19.4 percent national average.

The on-going struggles in the office sector have impacted the San Francisco market throughout 2024. In May, Google announced plans to exit its 300,000-square-foot space at One Market Plaza, as its lease will expire this April. The 1.6 million-square-foot office complex is owned by Paramount Group.

However, the market is also seeing notable leasing transactions. In November, Alexandria Real Estate Equities Inc. announced a long-term deal with Vaxcyte Inc. in San Carlos, Calif. The tenant signed a 10-year lease for 258,581 square feet at the company’s two-building Alexandria Center for Life Science.

The post JPMorgan Chase Commits to 280 KSF in San Francisco appeared first on Commercial Property Executive.

Piedmont Office Realty Trust has appointed Stream Realty Partners as exclusive leasing agent for The Connection, an office campus totaling 607,237 square feet in Irving, Texas. The Class A, three-building property is within the Las Colinas submarket of Dallas-Fort Worth.

Executive Vice President & Partner J.J. Leonard, Senior Associate Patrick Cruz and Managing Director Doug Jones with Stream Realty Partners’ Dallas Office division will handle leasing at the property.

The Connection, formerly known as Las Colinas Connection, includes the 231,681-square-foot building at 6031 Connection Drive, the 223,470-square-foot building at 6021 Connection Drive and the 152,086-square-foot building at 6011 Connection Drive.

READ ALSO: Innovative Solutions for Return-to-Office Challenges

The nine-, seven- and six-story properties feature floorplates between 27,464 square feet to 33,073 square feet, passenger elevators, on-site property management and a total of 2,089 parking spots. Amenities at The Connection include a conference center, a tenant lounge, outdoor patios, a fitness center and multiple services, such as shuttle services.

The current ownership bought the three buildings in a $124.8 million portfolio deal in 2022 from CarrAmerica Realty, according to CommercialEdge. Tenants at The Connection include Cardinal Financial Co., Epsilon Data Management and Gartner Inc., among others, the same source shows.

The approximately 20-acre office campus provides easy access to the Dallas metro, being close to Texas State Highway 114 and 183, as well as to interstates 635 and 35. Dallas Fort Worth International Airport is within 6 miles from The Connection, downtown Dallas is within 15 miles and Fort Worth, Texas, is within 27 miles.

High vacancy rates across Texas metros

The office sector continues to struggle with high vacancy rates, a recent CommercialEdge report shows. The national office vacancy rate as of November reached 19.4 percent, marking a 120-basis-point year-over-year increase. The Metroplex had a 23.9 percent vacancy rate, representing a 500-basis-point uptick while also being among the highest in the South region. Houston had a slightly higher rate at 24.2 percent, while Austin, Texas, recorded a 27.7 percent average vacancy and a 650-basis-point increase—the highest in the U.S.

However, several significant office leases still closed in Dallas-Fort Worth metro. A recent deal is Merit Energy Co.’s 104,034-square-foot leasing agreement at Two Lincoln Centre. The tenant will relocate its headquarters at the 620,000-square-foot office building, owned by Nuveen Real Estate.

Another significant deal is Bank of America’s 553,799-square-foot renewal in Addison, Texas. The tenant signed a 10-year deal at Hallmark Center I, with Stream Realty Partners representing landlord Office Properties Income Trust.

The post Stream Lands Dallas-Fort Worth Leasing Assignment appeared first on Commercial Property Executive.

The mental health company ComPsych Corp. has signed a long-term, 50,000-square-foot lease at One Pru, in downtown Chicago.

The tenant will relocate from the current 152,000-square-foot space it occupies at NBC Tower and will establish its new headquarters on the 7th floor in the first quarter of 2027.

Riverside Investment & Development represented the ownership, while JLL worked on behalf of ComPsych.

One Pru is part of the 2.3 million square-foot The Pru, previously knows as Prudential Plaza, which also includes the 1.1 million Two Pru. Wanxiang America Real Estate Group has been the majority owner since 2018. The company owns the property together with Sterling Bay.

READ ALSO: What’s Defining Office in 2025?

The tenant roster includes Wilson Sporting Goods, Clark Hill, Lessen, The Terry Group and Hubbard Radio, among others, according to CommercialEdge information. Back in September 2024, it was announced that Expansive will occupy the 35th floor at Two Pru, marking its seventh coworking space in the metro.

Located at 130 E. Randolph St. and 180 N. Stetson Ave. in Chicago’s central business district, The Pru is across the street from Millennium Park and has access to multiple transportation options. Chicago O’Hare International Airport is 18 miles northwest of the property.

JLL Executive Vice President Brian Means and Senior Vice President Kellen Monti worked on behalf of ComPsych, while Riverside’s Senior Leasing Manager Annie Kwasigroch, together with Senior Vice President Dan Heckman, represented the ownership.

Current renovations at The Pru

Completed in 1955 and completely renovated in 2014, One Pru was the first skyscraper built in Chicago after World War II. The 41-story building features floorplates ranging between 22,000 and 70,000 square feet, 30 passenger elevators and 45,000 square feet of retail.

The ownership invested $50 million in 2024 in a new renovation plan for The Pru, currently underway, Crain’s Chicago Business reported. The upgrades will include a 20,000-square-foot conference center, coworking spaces and an entertainment suite.

Additionally, the outdoor deck will feature a pickleball court and a bar area. In the next two months, One and Two Pru will be connected through a glass-enclosed walkway, in order for tenants to easily access the 72,000-square-foot shared amenity space on the 11th floor.

The post Chicago Tower Lands 50 KSF Lease appeared first on Commercial Property Executive.

Wexford Science & Technology and The University of Maryland, Baltimore have opened 4MLK, an eight-story, 250,000-square-foot life science building in Baltimore.

The developer broke ground on the facility, which is part of the university’s BioPark, in the fall of 2022. An $81.5 million loan originated by Ventas financed the construction, according to CommercialEdge information.

The multi-tenant lab and office building is the third such facility developed by Wexford within the campus.

READ ALSO: Life Science Trends to Watch in 2025

Located at 4 N. Martin Luther King Jr. Blvd., the mid-rise is within walking distance of the University of Maryland, Baltimore and less than 1 mile from downtown Baltimore. The Baltimore/Washington International Thurgood Marshall Airport is some 9 miles away.

The property comprises 160,000 square feet of Class A wet lab-capable space, 35,000 square feet of flexible, scale-in-place lab and innovation infrastructure and a 16,000-square-foot civic lounge and assembly space, along with an adjacent public plaza.

The building will house Wexford’s headquarters. In addition, a key tenant will be The University of Maryland School of Medicine, which will establish its new Edward & Jennifer St. John Center for Translational Engineering and Medicine at 4MLK. This center will enhance research collaborations and jointly develop cutting-edge innovations.

Part of a larger life science campus

The BioPark spans 14 acres and includes nearly 1.2 million square feet of laboratory, office, health-care and community-oriented space across seven buildings. Upon full occupancy, 4MLK will be home to the largest concentration of bioscience companies in the Greater Baltimore region.

The national life science construction pipeline has shown remarkable resilience, with 54.7 million square feet of new space underway between 2019 and October 2024, according to CommercialEdge data. Key life science clusters continue to prosper despite general economic challenges, largely due to their reliance on direct research and in-person collaboration.

The post Wexford, University of Maryland Complete Baltimore Life Science Building appeared first on Commercial Property Executive.

Atlanta’s office sector headed toward 2024’s end with mixed performance, but continued to show more resilience than other Sun Belt markets, CommercialEdge data shows. Office buildings in Atlanta still traded at below-average rates, while the market’s overall vacancy managed to remain at relatively healthy levels, considering the sector’s woes.

A new coworking provider entered the market in 2024, while overall investment volume remained muted. Development was active in some areas, notably with big life science projects taking shape, along with some mixed-use.

Supply expansion stays on track

Atlanta had 1.7 million square feet of office space under construction as of November, which was 0.8 percent of existing inventory—on par with the national figure. Adding planned and prospective developments to the mix brings the share to 2.3 percent of stock.

Compared to other Sun Belt metros, Atlanta was severely behind Austin, Texas (3.7 percent of stock underway), but slightly ahead of Charlotte (0.7 percent) and Houston (0.7 percent).

READ ALSO: Office Report: Coworking Spaces Evolve for Post-Pandemic Needs

Portman Holdings’ office building within the mixed-use Spring Quarter project had been the largest under construction as of November—it was completed last month. The asset has 530,000 square feet of office, 15,000 square feet of private terraces and 20,000 square feet of amenity space. The larger mixed-use development is also slated to eventually include 40,000 square feet of retail, 370 luxury rental units and 600 market-rate units.

Developers completed 11 office buildings encompassing 1.6 million square feet across metro Atlanta year-to-date through November. This was 0.7 percent of existing inventory, 10 basis points above the U.S. and 20 basis points ahead of Houston (0.5 percent).

Georgetown Co., Beacon Capital Partners and RocaPoint Partners completed the first building of Campus 244, an adaptive reuse of a 1970s building, in the Perimeter North submarket. The asset has 377,775 square feet of rentable office space and is part of a larger mixed-use project, which is set to also include restaurants, retail and a hotel.

Another significant completion earlier in 2024 was Trammell Crow Co.’s first phase of Science Square, developed in partnership with Georgia Advanced Technology. The 368,258-square-foot building includes lab and clean room space, base-building systems, a 38,000-square-foot solar array and an energy recovery system.

Conversion potential grows

As office utilization continues to evolve and demand is nowhere near pre-pandemic levels, many owners are looking toward alternative solutions. Conversions to residential use continue to rise in popularity and Atlanta’s office sector is no exception. CommercialEdge created the Conversion Feasibility Index, a score calculated from various building characteristics aimed to help developers and investors identify office assets that have a high potential for conversion.

Atlanta had 16 office buildings—encompassing 2.6 million square feet—in the Tier I category for office-to-residential conversion, which have a CFI ranging from 90 to 100. It also had 74 properties—11.7 million square feet—in Tier II, which have a CFI between 75 and 89.

Invest Atlanta partnered with several companies—including The Integral Group, The Atlantic Cos., T. Dallas Smith & Co. and Lalani Ventures—to redevelop three office assets in the metro’s CBD, Atlanta Business Chronicle reported. The buildings at 1, 2 Peachtree St. and 14 Marietta St. total nearly 2 million square feet and are estimated to yield roughly 600 multifamily units, but plans are not final yet. Originally an office tower, 2 Peachtree St. NW dates back to 1966 and rises 44 stories. Holding a CFI score of 75, the property is slated to include 200 affordable units upon conversion.

Atlanta office sector’s vacancy below nation’s average

Office vacancy across metro Atlanta stood at 17.8 percent as of November, up 80 basis points year-over-year. Meanwhile, the national average increased 120 basis points, to 19.4 percent. Compared to its Sun Belt peers, Atlanta’s vacancy fared better than Austin (27.7 percent) and Houston (24.3 percent), but lagged Charlotte (16.4 percent).

Significant lease deals this year included a mix of renewals and new agreements. In September, T-Mobile renewed its 100,000-square-foot lease at CP Group and Farallon Capital Management’s One Ravinia.

In November, Jamestown signed a new tenant at its Ponce City Market. CONA Services agreed to occupy 49,000 square feet at the mixed-use property. The IT company will relocate from its 10 10th St. NE office, where it occupies 32,600 square feet.

Some larger deals took shape earlier this year, such as Building and Land Technology’s 180,000-square-foot agreement at Concourse Office Park in Sandy Springs, Ga. Newell Brands is the new tenant, set to move in by mid-2025.

New coworking firm enters Atlanta

In November, Atlanta had around 4.4 million square feet of shared office space, which was 2.1 percent of the market’s total rentable inventory. The coworking segment continued to steadily grow across the metro, with the share of coworking space being 20 basis points above the national figure. Compared to other Sun Belt markets, Atlanta outperformed Charlotte (1.9 percent), Houston (1.8 percent) and Austin (1.7 percent).

Last month, coworking provider e|spaces entered the Atlanta market. The company leased a 32,030-square-foot, full-floor space at Adventus Realty’s 1600 Parkwood Circle asset. Most of Atlanta’s flexible office is in suburban areas, and e|spaces’ first location is no exception, being in the Cumberland/Galleria submarket.

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Private equity firm Incline Equity Partners has signed a 14,198-square-foot lease at 101 Park Ave., HJ Kalikow & Co. LLC’s Midtown Manhattan tower.

Incline Equity’s new space at the office building will be on the 47th floor, in addition to the existing 18,000-square-foot lease on the 46th floor. The company relocated to 101 Park Ave. in 2023, doubling its previous office space at 505 Fifth Ave.

JLL’s Vice Chairman Alexander Chudnoff, Senior Managing Director Nick Francic, Vice Chairman Harrison Potter and Senior Associate Kate Roush worked on behalf of the tenant, while Cushman & Wakefield’s Executive Vice Chairman John Cefaly and Managing Director Nicholas Dysenchuk represented the ownership in the transaction.

HJ Kalikow & Co. has owned and operated the property since it was built in 1982. The Manhattan tower is currently the subject of a $365 million 10-year fixed-rate loan originated by Bank of America in 2018, according to CommercialEdge information.

49 stories above Manhattan

The Class A, LEED Gold-certified property consists of 1.3 million square feet of space across 49 stories. The building features a five-story lobby entrance, as well as 30,000 square feet of retail space and a 17,000-square-foot, two-story museum. Amenities include full-time concierge services, Club 101, a dining club, a business and entertainment venue and a tech-enabled corporate event space. Federal Home Loan Bank of New York, Fox Rothschild LLP, Morgan Lewis and Hound Partners LLC are among the property’s tenants.

Located at the corner of 40th Street and Park Avenue, the office tower is less than 1 mile from the Grand Central – 42nd Street subway station, Bryant Park and Times Square.

Earlier this week, JLL and Colliers brokered a major office lease at 1166 Avenue of the Americas in Manhattan. The Federal Deposit Insurance Corp. signed a 10-year agreement to occupy 147,543 square feet at Edward J. Minskoff Equities’ property.

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Developer Gilbane and NJ Transit Corp. are planning to develop a 500,000-square-foot, 25-story office building in Camden, N.J. The project is part of the $250 million redevelopment of Camden’s Walter Rand Transportation Center, which has been underway since 2021.

The tower, which will be called the Beacon Building, would be partly occupied by Cooper University Health Care, which is undergoing a $3 billion expansion that will also include three new clinical towers. There is the possibility that the state of New Jersey will relocate civil courts to the Beacon Building.

READ ALSO: Why the Medical Outpatient Sector Is Poised for Growth in 2025

The Beacon Building will have five floors measuring 27,000 square feet each and 20 more measuring 18,000 square feet, according to Camden County.

Other aspects of the Walter Rand redevelopment will include updates to the site’s transportation center, originally developed in 1989, as well as a new parking structure and a public square. The PATCO Speedline subway and the River Line light rail connect to the center, along with a number of bus lines. NJ Transit owns the site, and Gilbane is the master developer.

The developers have not announced how much the structure will cost, nor its source of financing. They do note that the building will be the tallest in southern New Jersey outside of Atlantic City. The space will service the growth of “eds and meds” in this part of suburban Philadelphia, the developers assert.

Class A office demand in South Jersey

The demand for medical office space is robust in southern New Jersey, with almost 200,000 square feet of space leased in 2024 by the end of the third quarter, according to Newmark, which predicts that demand will continue to grow in 2025 as employment in the sector grows. Overall office space occupancy edged up 0.2 percent quarter-over-quarter in the third quarter of 2024.

Class A office space has the advantage in leasing. As of the third quarter of 2024, Class A office vacancy in southern New Jersey came in at 13.2 percent, or 206 basis points lower than the overall office vacancy rate, noted Newmark, with an annual average of an 117-basis point delta since 2020. That compares with a gap of only 62 points (with Class A vacancy lower) in the years between 2016 and 2019.

Health-care employment is a prime driver of office space use in the region, Newmark reported, along with leisure and hospitality and government. Health-care employment in Greater Philadelphia grew 4.8 percent year-over-year as of the third quarter of 2024, the most of any sector.

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