Investors Bet on an Office Rebound as Deal Volume Increases

Data from Trepp shows $6.2B in office properties traded hands in January 2025 alone—an 80% increase YoY.

Jordan B.
May 02, 2025

Together with

Good morning. Office real estate may not be out of the woods, but rising sales, softer debt terms, and cautious optimism from big REITs suggest a potential turning point in 2025.

Today's issue is sponsored by Robora Financial—bringing 3.9% returns and efficiency to operating cash.

Market Snapshot

S&P 500

GSPC

5,528.75

Pct Chg:
+0.64%

FTSE NAREIT

FNER

753.63

Pct Chg:
+0.11%

10Y Treasury

TNX

4.227%

Pct Chg:
+0.011

SOFR

30-DAY AVERAGE

4.32%

Pct Chg:
-0.00

*Data as of 05/1/2025 market close.

Investor Optimism

Investors Bet on an Office Rebound as Deal Volume Increases

A surge in office property transactions and a slight bump in prices suggest investors may be testing the waters again, even as key metrics remain shaky.

Office sees renewed activity: Office may still be under pressure, but that hasn’t stopped a rebound in investment activity. Data from Trepp shows $6.2B in office properties traded hands in January 2025 alone—an 80% increase YoY. While prices are still more than 20% below 2022 peaks, a modest uptick in Q424 hints at possible bottoming.

Small signs of hope: The post-Covid office sector remains unstable. Large REITs like SL Green, Vornado, and BXP are still grappling with declining occupancies and maturing debt. Despite strong fundamentals, some trophy assets are even ending up in special servicing. Still, some market signals suggest cautious optimism, like lender willingness and increased transaction volume.

REITs under pressure: Office occupancy has slipped across nearly all major REITs since 2019. Vornado dropped from 96.7% to 88.8%, BXP fell from 93.0% to 87.5%, and Kilroy took the steepest hit, down to 82.8%. The lone standout: COPT Defense, which edged up to 93.6%. While some REITs like Vornado and SL Green expanded their footprints, others, most notably Cousins and BXP, shrank theirs.

Cost of capital comes down: Debt is becoming slightly cheaper for many players. Between 2025 and 2026, coupon rates on REIT debt have generally declined—Vornado from 5.00% to 3.83%, and BXP from 6.16% to 3.20%. But not everyone benefited: Empire State Realty Trust saw its rates jump from 3.39% to 4.77%, reflecting lender caution in certain profiles.

CMBS exposure grows: Office properties now make up a larger chunk of CMBS conduit loan collateral—16.13% in Q125, up from 13.03% a year earlier. That signals that the asset class is not being written off, but also highlights growing concentration risk in the sector.

➥ THE TAKEAWAY

Zoom out: Investors aren’t declaring victory just yet, but rising deal volume, stabilizing prices, and looser lending suggest the office sector may finally be climbing out of its trough, one cautious step at a time.

TOGETHER WITH ROBORA FINANCIAL

Earn 3.9% Across All Accounts – Seamlessly

Maximizing returns on cash in banks, across multiple accounts, has never been easy – until now. Robora’s platform provides simple access to high cash returns without leaving your bank. With Robora you are able to link your existing accounts to high yielding bank accounts, and sweep your cash when not in use.

End your frustration with your bank and its low rates
Utilize cash management and automated sweeps
Increase your FDIC coverage across all amounts
Decrease 3rd party payment fraud risk

Start earning what you deserve now.

*This is a paid advertisement. Please see the full disclosure at the bottom of the newsletter.

✍️ Editor’s Picks

Are you overpaying in property taxes? Ownwell's 2025 report uncovers market trends, assessment gaps, and strategies to protect profits. Download now and stay ahead. (sponsored)
Prime push: Amazon is planning a $4B rural warehouse expansion by 2026 to cut carrier reliance and add 100,000 jobs.
Dividend delay: Piedmont Office Realty Trust suspended its dividend for the first time to conserve $60M annually, as over 10% of signed tenants aren’t yet paying rent
Leasing lift: US apartment leasing gained strong momentum in early 2025, with new lease trade-outs improving from a 4% decline in late 2024 to flat by March.
Financing the pitch: Beckham, Mas, and Ares locked in a $450M loan for Miami Freedom Park, the future home of Inter Miami and centerpiece of a $1B mixed-use build.
Sentiment slide: CREFC’s Q125 Sentiment Index dropped 30.5%, its second-largest fall ever, as uncertainty drove a sharp downturn in CRE finance outlook.

🏘️ MULTIFAMILY

Eviction risk: LA landlords face mounting pressure as a $118M Section 8 shortfall threatens rent payments for 59K households and raises eviction risks citywide.
Midwest pressure: Milwaukee’s tight supply and surging demand have made it one of the most competitive US rental markets, with rising rents and multiple generations vying for limited units.
Conversion wave: Manhattan is rapidly converting over 8 MSF of aging office space into housing to ease shortages and revitalize underused buildings.
Crypto closing: A Miami studio at The Rider Residences sold for $528K in Bitcoin, the first direct wallet-to-wallet real estate deal.
Rent debate: NYC’s Rent Board preliminarily backed hikes up to 4.75% for one-year leases, falling short of landlords’ 6.3% ask and reigniting rent-stabilization tensions.

🏭 Industrial

E-commerce engine: E-commerce grew 8% in 2024, fueling industrial space demand even as new supply slows and vacancy rates edge up.
Merck milestone: Merck broke ground on a $1B biotech center in Wilmington, set to create 500+ jobs and produce next-gen biologics.
Data deal: Colovore bought a 29 KSF Santa Clara data center for $37.2M, nearly 49% above Ellis Partners' investment.

🏬 RETAIL

Luxury ties: Kite Realty and Singapore’s GIC acquired Dallas’ upscale Legacy West for $785M, underscoring continued investor interest in high-quality retail assets.
Lease grab: Burlington is scooping up 45 Joann store leases from bankruptcy, capitalizing on limited new retail development to fuel its ongoing expansion.
Flagship buy: Ralph Lauren has purchased its longtime SoHo flagship at 109 Prince Street for $132M, locking down a prime retail asset in one of NYC’s top luxury corridors.
Anchor exodus: Saks joins Bloomingdale’s, Nordstrom, and potentially Macy’s in leaving Union Square, contributing to a downtown vacancy crisis.

🏢 OFFICE

Top performers: Tech hubs like San Francisco and Boston are leading a surprising Q1 rebound in office demand, as a cooler job market gives employers more leverage to enforce RTO policies.
Distress sale: A Chicago office tower is hitting the market at a 59% discount, spotlighting deep stress in the city’s post-pandemic office sector.
Leasing momentum: BXP beat leasing expectations in Q1 with 1.1M SF signed and a robust pipeline, signaling tenant confidence despite broader market headwinds.
Houston handoff: Brookfield handed over Houston Center’s 4.6 MSF office campus to lender AustralianSuper amid ongoing market distress.
Office-to-dorm: Suffolk University issued a $158M bond to fund its office-to-dorm conversion, creating 280 student beds in downtown Boston.

🏨 HOSPITALITY

Tourist dip: LA’s hotel industry is struggling under economic headwinds, weak tourism, and looming wage hikes, even as the city prepares to host the World Cup and Olympics.
Motek moves: Florida-based Mediterranean restaurant Motek is entering NYC with a 10-year lease at 928 Broadway, its first of several planned locations in the city.
Investor freeze: Private equity firms are pulling back from US hotel deals as tariffs, market volatility, and a sharp drop in foreign tourism shake confidence in the sector.