America‘s Commercial Real Estate Show · Bull Realty

Could the Office Sector Be Changing? with Phil Mobley

·39 min·3 clips

Phil Mobley explains why New York's office recovery looks normal while Los Angeles and Chicago are still finding their footing.

Office remains unusually exposed. Michael Bull starts from a blunt premise: in his view, this part of U.S. commercial real estate has taken the hardest hit over the last few years. Still, he thinks a turn may be coming. Phil Mobley brings it back to the decisions occupiers are making now, especially as REITs and institutions begin dipping back into the market. The field is not as wide open as it was. With some REITs and institutions returning, occupiers have less room to cherry-pick buildings they might want to buy. Buying is still on the table. Mobley explains why a company might purchase a building, put money into it, and use its own occupancy to support a workplace that fits better than a standard lease. Every option has a catch. A company may give up location to get a newer or more premium building in a less favored submarket. Or it may do the opposite: take a B-plus or A-minus building in a stronger location, then use a TI allowance or its own capital to make the space work. Staying put is part of the story too. A three-year or five-year extension can save money and delay a move, especially when slower hiring takes pressure off the current footprint. That helps existing landlords, but it can also delay the more customized workplace many companies have been chasing since office demand changed. Supply matters as well. Mobley notes that development capacity has slowed compared with five to ten years ago. Bull ends by tying that read back to what his office sales team is seeing in the South.

As heard by us

A practical look at office-market pressure and the tradeoffs it creates.

America's Commercial Real Estate Show treats office as the commercial real estate sector under the most pressure, while Michael Bull makes the case that a rebound may arrive sooner than expected.

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Why you'd press play

A calm read on office leverage before you make your next move.

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