Saeed Azhar, Matt Tracy and Carolina Mandl
New York (Reuters) – Investors, including Blackstone and rich individuals, scouting an office real estate in New York, while companies invite employees back to the office, encouraging an initial recovery on the market of beaten commercial real estate.
An increasing appetite for offices in New York and beyond could signal a wider economic recovery for big cities around the world, as many workers personally return five days a week, increasing demand for local services. The turnaround comes after investors avoided the voids of commercial spaces for years after the pandemic.
Real estate investors, advisers and bankers say the demand for high quality offices in New York, which drives them to reach more contracts. Among the bull’s inscriptions is the Amazon Universe Hunt, a BXP who keep conversations with tenants for a new building and Blackstone are becoming more optimistic in the sector.
Blackstone President Jonathan Grey said he was tidying up in New York and San Francisco offers a convincing value.
“In New York, you have financial services companies that grow fast, you have no new buildings,” Gray said on Tuesday at a conference. “In San Francisco, values have grown a lot, in some cases 75%, and AI and technological innovation are really housed in San Francisco.”
Blackstone has drastically reduced the exposure to the office in recent years. Its current exposure to the Office makes up less than 2% of real estate stakes, opposite more than 60% in 2007, according to DATA data. Last year, the Investors reached several office contracts that the conditions for leases improved and tenants became more active, advisers said.
Among them, Blackstone wants to buy a big share in an office building on 1345 Avenue of the American at Manhattan. He refused to comment on his investment plans. “There is definitely more agreements to the extent,” said David Giancola, the higher director of the capital markets at the JLLA JLLA.
However, trouble still exists for the older class B and C, some medium -sized blocks or buildings that do not have a view and it is impossible to rent them, said Ran Eliasaf, founder and management partner at the Northwind Group Private Capital.
Economic growth and lower interest rates also increase demand for offices, senior industry managers said.
“The world returns to work and returns to personal work, without question about it,” said Owen D. Thomas, President and Executive Director Boston, based in the real estate of BXP Inc. “Real estate is financial assets guided by interest rates, so it’s useful,” he added. BXP is an interview with four to five residents of the anchor to build a 46 -upstairs tower in Midtown Manhattan, Thomas said.
The commercial project is not far from the new global seat of the JPMORGAN Chase, which has a space for 14,000 employees and will be completed by the end of this year.
With some of the biggest office offices in the US – like Amazon and JPMORGAN – moving to five days a week of personal attendance, the company could encounter a lack of space after they have broken in offices in the last five years, the note has been said.
Amazon is looking for more space in New York, according to the source familiar with the issue. The company refused to comment.
NEW BUILDING
When one billionaire Ken Griffin decided to combine offices for his Hedge Fund Citadel and the Citadel Securies’ market manufacturer in Midtown about three years ago, he could not find enough space. He decided to build a new building instead, crossing in front of the wave of 5-day terms that fill the offices. Griffin, with Vornado Realty Trust and Rudin Management, develops a 62-year-old skyscraper on 350 Park Avenue with a space for 6,000 people. Citadel and citadel securities will serve as anchor for tenants for the building, which is expected to be completed by 2032. Employees of Griffin’s companies will start moving to a temporary location next year, so that the current building, the 1960 -AD structure can be demolished.
The odds are reflected on CAP rates, the measure used by investors to assess profitability and real estate risk. The rates of the caps have suddenly increased after the pandemic, which is less attractive to investors to buy real estate. After reaching in the first quarter of 2024, a peak of 6.99%, the meter fell to 5.77% by the end of the year, signaling a better refund for investors, the TEPP research company showed.
The quantities of sales for commercial real estate in the United States also increased by 9% at the age of 2024 after falling at half past 2023, according to the CBR CBR. Relaxation climbed after she dropped abruptly during gandemic exclusions and remote work, analysts said.
According to the Avison Young Company Company Company, the use of the Manhattan office was 79.9% in January 2025. Compared to 66.9% in the offices in the main and secondary cities in the United States compared with the level before the pandemic.
City commercial buildings have a variety of residents from a series of industries, including finances, insurance and technology, said Doug Middleton, Vice President of the CBE investment Properties Group. Other cities rely more on one or two industries, he added. Ordinary individual investors are also beginning to return to investments in the offices of high quality class A, which the Bank has started for the financing of the contract, said Nishi Somaiya, Global Glavan Goldman Sachs from private banking, lender and deposit.
“Our portfolio Cre Zadm is growing at a private bank, which tells you that there is a lot of demand and trust in the sector,” she said.
In Europe, a high demand for high quality offices pushes rents in central London records, providing investors to the cause of optimism, even if the total amount of office sales remain in many years of lowest places. “People were very excited after the dice that this was the end of the office-never the end of the office,” said Hugh White, the higher director of London with headquarters in London at BNP Paribas Real Estate.
(Reporting Saeed Azhar and Carolina Mandl in New York and Matt Tracy in Washington; An additional reporting of Iain Withers in London and Davide Barbuscia in New York; Mounting Lananh Nguyen and Nick Zieminski)
