2025 Global Outlook – 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.¹

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.

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.