A Faster Than Expected Return to Office Rollout Is Boosting Investors Confidence “The stance of dramatically reducing office space as a result [of the pandemic] has softened in recent months,” notes one market observer.
Initially, office-using employers were expected to begin a return to the office after Labor Day. However, that timeline now appears to be accelerating. Firms ranging from JP Morgan to Google have moved up their return dates. “A faster-than-expected vaccine roll-out and removal of restrictions in many gateway geographies has resulted in a number of high-profile financial services tenants pushing up their return-to-work expectations to mid-summer,” says Eric Enloe, managing director for valuation and advisory services with real estate services firm JLL.
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Taoiseach Micheal Martin TD arrives at the Convention Centre, Dublin (Image: Gareth Chaney/Collins)
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Population growth, favorable tax environments and higher yields are driving more interest in secondary cities.
Investors seeking higher yields on office acquisitions than core markets could provide have been realigning their investment strategies to target smaller markets over the last decade, as many Sunbelt cities saw high population growth. The pandemic, which expanded remote working opportunities, at least in the short term, accelerated migration to smaller markets in warm climates with a relatively low cost of living and high quality city life. As a result, employers are following the talent and investors are following the employers.
Some major investors have recently announced plans to focus on growing secondary and tertiary markets, including Highwoods Properties, an office REIT based in Raleigh, N.C., and the newly formed Cohen & Steers Private Real Estate Group, a dedicated private real estate investment team of New York-based global investment manager Cohen & Steers