Office Net Operating Income (NOI) Gets Boost From Job Growth and Technology Sector

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Trepp, LLC, a leading provider of information, analytics, and technology to the structured finance, commercial real estate, and banking markets, has released its research report titled “Office NOI Gets Boost from Job Growth and Technology Sector.”

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Thanks to a strong economy, driven by record-low unemployment numbers, robust job growth, and booming technology and healthcare industries, the office market has experienced stable NOI growth.

Trepp, LLC, a leading provider of information, analytics, and technology to the structured finance, commercial real estate, and banking markets, has released its research report titled “Office NOI Gets Boost from Job Growth and Technology Sector.” The full report can be downloaded here: https://info.trepp.com/office-noi-research-february-2020-pr.

To determine the effect of shifting market factors on this property sector’s performance, Trepp analyzed the net operating income (NOI) levels of outstanding office loans and segmented results by property subtype and geographic region, to assess what trends could shape the future of this market.

“Thanks to strength in our economy, driven by record-low unemployment numbers, robust job growth, and booming technology and healthcare industries, the office market has experienced stable NOI growth, said Trepp Research Analyst, Jyoti Yadav. “While economists point to likely slower 2020 growth and other uncertainties as challenges, the office sector is expected to remain a stable performing asset.”

The majority of the office market demand has been driven by the technology sector; indeed, leasing velocity outside of tech has been lower than expected, and office properties in MSAs with established or growing technology industries have outperformed those in other areas.

Office facilities currently serve as collateral for roughly $148.7 billion in CMBS loans which is the largest of all property types, accounting for just over 27% of the overall CMBS universe. By property subtype, offices residing in urban metros account for the lion’s share, backing $103.2 billion or roughly 70% of the outstanding securitized office balance, followed by suburban offices which comprise roughly 18%, at $26.7 billion.

For a closer look at the sector’s performance by geographic region, Trepp examined its data of consecutive year-end financials reported on more than 16,000 office loans across the nine census divisions delineated by the US Census Bureau.

For additional details, such as a geographic breakdown and analysis of factors impacting the growth in multifamily net operating income, download the Office NOI Report here: https://info.trepp.com/office-noi-research-february-2020-pr. For daily commercial real estate and CMBS commentary, follow @TreppWire on Twitter.

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Jyoti Yadav
@TreppWire
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