A version of this article first appeared in the CNBC Property Play newsletter with Diana Olick. Property Play covers new and evolving opportunities for the real estate investor, from individuals to venture capitalists, private equity funds, family offices, institutional investors and large public companies. Sign up to receive future editions, straight to your inbox.The U.S. office market has been in a tailspin since the start of the pandemic, when workers were first ordered home. Some, especially younger workers, never came back — leaving many office buildings half full or empty. The overall vacancy rate for offices, however, fell 20 basis points in the third quarter to 18.8%, according to CBRE. While that’s still historically high, it marks the first year-over-year decline in vacancy since the first quarter of 2020, when Covid took hold in the U.S.Leasing activity last quarter exceeded the five-year quarterly average, driven by financial services and technology firms, according to the report. The construction pipeline also dropped and is on track for the lowest annual total in over a decade. “I definitely think we hit bottom. I think we hit bottom in 2024,” said Owen Thomas, CEO of BXP (formerly Boston Properties), the largest office REIT in the U.S. “There are lots of positive things that are going on for part, not all, of the office business.”One of those positives is lower interest rates. Capital is coming back to office real estate, Thomas said, starting on the debt side, where there have been several large debt securitizations. BXP just completed single-asset securitizations on high-end office buildings in New York City and Boston, he said. Get Property Play directly to your inboxCNBC’s Property Play with Diana Olick covers new and evolving opportunities for the real estate investor, delivered weekly to your inbox.Subscribe here to get access today.BXP is almost entirely invested in the top tier of the market, with many of its tenants in financial and …
