2025 Mid-Year Global Investment Outlook: Office

2025 Mid-Year Global Investment Outlook: Office

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The Office Sector

Fundamental conditions in global office markets have been significantly disparate. Seoul remains a strong office market with low vacancy rates and strong rent growth. However, fundamentals do seem to be softening a bit. Meanwhile, the office market in India has been showing notable signs of growth. For example, office rent growth in the country hit a 14-year high in 2024 and also saw record net absorption.
 

Key Takeaway:

Given the delayed leasing decisions over the last several years, particularly in U.S. markets, the increase in uncertainty may not have as large of an impact as it has historically.

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The Opportunity:
U.S. office credit remains the top opportunity

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European Central Business Districts had been holding up quite nicely, but have started to soften as of late. In the U.S., the national office recovery appears to be underway with Manhattan leading the way, but improving fundamentals are increasingly visible in softer markets such as San Francisco.

 

While the highest-quality space has been leading the improvement, tenants are increasingly leasing space in the next tier down, given the lack of high-quality space available for lease. The recovery in Trophy and Class A office demand and an increasing need for financing underscore our thesis that debt investors should remain bullish on the U.S. office market. 

Disclaimer


The content herein and in the report is provided for informational purposes only. Nothing above or in the report constitutes investment, legal, or tax advice or recommendations. Such content should not be relied upon as a basis for making an investment decision and is not an offer of advisory services or an offer to invest in any product or asset class. It should not be assumed that any investment in an asset class described herein will be profitable. Any projections, estimates, forecasts, targets, prospects and/or opinions expressed in these materials are subject to change without notice. Opinions or beliefs expressed in these materials may differ or be contrary to opinions expressed by others. Certain information above and in the report has been obtained from third-party sources. Hines has not independently verified such information.