S&P Global Market Intelligence offers our top picks of real estate news stories published throughout the week.
More companies in the US have moved away from fully remote work and have adopted office-centric attendance policies in the third quarter, according to a report by CBRE Group Inc.
In the July-September period, 32% of companies tracked had policies that require onsite office work three or more times per week, up from 28% in the second quarter and 13% in the first quarter.
Full-time office work was adopted by 14% of the companies in the third quarter, compared with 11% in the previous quarter.
The share of companies that allowed fully remote work declined to 4% in the third quarter from 8% a quarter ago.
CBRE tracked 278 US companies for the report.
Office real estate investment trusts are seeing more foot traffic on their properties due to the increased adoption of onsite work-centric policies.
"We continue to be encouraged with the return to office trajectory we are experiencing in our buildings, as well as the rhetoric and actions of many of our clients with respect to their in-person work policy," said Boston Properties Inc. CEO Owen Thomas during the REIT's third-quarter earnings call.
The accelerating return to work trend is expected to result in increased leasing activity, Peter Brindley, Paramount Group Inc.'s executive vice president and head of real estate, said on the REIT's third-quarter earnings call.
CHART OF THE WEEK: US REITs' median implied cap rate up in Q3 2023
⮞ The median implied capitalization rate for US equity REITs stood at 8.3% in the third quarter, up 10 basis points from a quarter ago.
⮞ The third-quarter rates were the highest since the second quarter of 2010.
⮞ The office sector recorded the highest median implied capitalization rate, at 10.7% in the third quarter, although it went down 38 basis points from a quarter ago.
M&A
– Private equity firm KSL Advisors LLC completed the acquisition of hotel REIT Hersha Hospitality Trust. The all-cash transaction was valued at about $1.4 billion.
Office focus
– E-commerce giant Amazon.com Inc. is searching for roughly 50,000 square feet of office space in Miami, Bloomberg News reported, citing people familiar with the matter.
– Pharmaceutical company Eli Lilly and Co. will open a new location for its Gateway Labs accelerator program at Alexandria Real Estate Equities Inc.'s University Town Center campus in San Diego. The facility will offer nearly 62,000 square feet of rentable laboratory space.
– Broadcom Inc. will relocate its headquarters in California to Palo Alto from San Jose, the Silicon Valley Business Journal reported. The site spans 1.6 million square feet at 3401 Hillview Ave. and is the campus of VMware, which Broadcom recently acquired.
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