Lincoln Property Targets Quality Office Buildings Just Below ‘Top-Tier’
Lincoln Property Company has been an active investor in the California office market, closing 13 office transactions in the past two years, spanning 2.9 million square feet.
Its pipeline includes a Class-A office building in San Francisco and a 350,000-square-foot office campus in San Diego.
“With many trophy assets off the market, high-quality, well-located buildings just below the top tier are offering strong value,” Scott Moffatt, executive vice president and San Diego market leader at Lincoln Property, told GlobeSt.com.
“It has become increasingly clear over the last several years that trophy buildings in prime locations continue to attract tenants. This isn’t because they’re available at bargain prices, but because users have focused on recruiting and retaining employees in an office setting and are willing to pay the freight.
He explained further that demand for the rest of the Class A segment is increasing, particularly for owners who are well-capitalized and able to offer reasonable concessions to prospective tenants.
"Lincoln is seeking office buildings that offer a compelling value proposition to their tenants,” Moffatt said.
“Fundamentally, this includes prime locations, strong amenities, and the ability to help tenants improve their spaces in ways that allow them to cultivate and support high-performing teams."
As for market hot spots, Moffatt said San Francisco, for one, is seeing net new demand from AI companies.
Debt Availability Improving
Moffatt said the most dramatic change over the past year has been the availability of debt. However, that is improving.
“While industrial, multifamily, and data center investments continue to capture much of the lending ecosystem's attention, we’ve seen a meaningful rebound in the volume of lenders willing to evaluate high-quality office opportunities constructively,” he said.
“This liquidity is allowing greater pricing transparency, improved project economics, and higher transaction volumes, which should help continue to propel the office market forward.”
Source: GlobeSt/ALM