February 28, 2020
The office market has experienced stable NOI growth over the past year, thanks to a strong economy, record-low unemployment numbers, robust job growth and surging technology and healthcare industries, according to a recent Office NOI report from Trepp.
The provider of data, analytics and technology solutions determined the effect of shifting market factors on the office sector’s performance. Trepp analyzed the net operating income levels of outstanding office loans and segmented results by property subtype and geographic region, to assess trends shaping the future of the market.
One significant finding of the report was that coworking giant WeWork serves as a top-five tenant behind more than $5.6 billion in CMBS debt, most of which comes from recently issued transactions. Trepp also found that most participants in the report are keeping a close eye on flexible office and coworking spaces, which gained significant traction due to a growing freelance economy and a shift in workplace preferences.
Most of the recent demand in the office sector has been driven by the technology sector. Trepp reports that office properties in metro areas with established or growing tech industries have outperformed those in other areas.
Office facilities currently serve as collateral for roughly $148.7 billion in CMBS loans, according to Trepp, which is the most of all property types, accounting for just over 27% of the overall CMBS universe.
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