Plunging demand for commodity places of work within the US is driving development for the highest-quality properties, a Morgan Stanley govt mentioned.
Many older places of work “will be stranded because they simply don’t have long-term cash flow growth potential,” Lauren Hochfelder, co-chief govt officer of Morgan Stanley Actual Property Investing, mentioned in a Bloomberg Tv interview Thursday. “Those assets just don’t meet modern tenant demand, they don’t meet them from a standpoint of quality or amenitization.”
One of the best buildings are these that concentrate on wellness and facilities and are well-located, Hochfelder mentioned. The development is clear in locations comparable to San Francisco, which is likely one of the worst workplace markets globally, she mentioned.
“We own some of the best office assets in that market,” Hochfelder mentioned. “Even today, we’re signing leases at rents above pre-Covid levels.”
Morgan Stanley has been seeking actual property offers that come up from the upheaval in commercial-property markets around the globe. It’s notably centered on industrial buildings, as e-commerce and shifts within the world provide chain stoke demand, Hochfelder mentioned.
