Office
Arizona is at the epicenter of an evolving dynamic that can best be described with a phrase uttered by a panelist at ULI Arizona’s Trends Day 2024—disruption equals opportunity.
For months, if not years, panic-inducing headlines have lamented the existential crisis facing the U.S. office market as a “wall of maturities” looms: $2.2 trillion of commercial real estate debt coming due between now and the end of 2027, according to Trepp estimates.
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As office values have declined, it’s created a pivotal moment for astute investors and developers as they evaluate the underlying land value and look for the best property uses over the long term. Indeed, there is latent potential in the evolving office landscapes, but a keen and studied eye will be required to discern the true opportunities from the potential money pits.
The strain of higher interest rates is creating sleepless nights for some commercial real estate owners and operators these days. On the flip side, there is significant capital eagerly lining up to take advantage of market dislocation.
Many office property owners are heading for the exits amid weaker demand and looming debt maturities, while opportunistic private equity groups are leaning in to capture what could be once-in-a-generation buying opportunities.
Hollywood and the film industry has changed dramatically over the last several decades, especially in recent years with the rise of streaming networks.
Although residential fell more in the first quarter of 2023, office remains Europe’s most scarred commercial real estate sector, according to advisory firm Green Street. Government mandates around sustainability are also tightening, and Cushman & Wakefield says 76 percent of European office space could be obsolete by 2030 unless landlords start investing now.
While some big-box retail stores are closing, some developers are eyeing opportunities with retail-to-life science conversions or additions.
Mass timber has come a long way in the United States in the past eight years. Fulfilling mass timber’s green potential means responsible forest management and planning for what happens to the timber after the building’s end of life.
Despite ominous national headlines about New York City office, the vacancy rate is at 9.7 precent in the first quarter of 2022, a full 140 basis points above pre-pandemic levels, according to Moody’s. And, on the ground, New York City office landlords like Leslie Himmel, founder and co–managing partner of Himmel + Meringoff Properties, are doubling down on the city.