The Office Sector

2025 Global Investment Outlook: Office

Beleaguered but Potentially Turning a Corner

The Office Sector

Office fundamentals are dislocated in many markets, but the regional variances are significant. In general, and with the notable exception of Australia, market fundamentals have been stronger in Asia and weaker in North America, with European markets somewhere in the middle, mostly because of higher supply constraints and a smaller impact from work from home trends compared to North American markets.

Key Takeaway: The Office Sector

Regional variances in the office sector are notable, as is the dislocation in the capital markets in the face of weak fundamentals. But signs of momentum and opportunity are emerging.

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Despite less than robust economic conditions, European prime office rent growth accelerated even as the other property sectors cooled (see chart below). Note, this growth is primarily in major Central Business Districts, while suburban submarkets in Europe remain soft.

Prime Office Rents Rising Robustly in Europe Reflecting Lack of High-Quality Space

Sources: CBRE and Hines Research. As of Q3 2024.

Meanwhile, the dislocation in U.S. office capital markets has created opportunities across the capital stack. As existing loans mature, the lack of traditional financing to meet refinancing requirements has created a situation where debt may be a more attractive investment than equity.

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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.


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