Ronald Kamdem, head of U.S. REITs and commercial real estate research at Morgan Stanley, joined the REIT Report podcast to discuss current performance in the office REIT sector and how it is positioned for 2026.
Kamdem spoke about the recovery of the office market post-pandemic, highlighting regional variations, trends in leasing and utilization, the impact of new developments, and the future of class B assets. Current sentiment in the REIT space, and how valuations are influencing strategies moving forward, were also discussed.
“There's a lot of excitement in the office market right now because there's certainly been a lot of leasing that's been done in 2025…for the first time from a financial perspective, you're in a position where in 2026 going into 2027, you're going to be able to post some sort of financial and earnings growth to the market that people want to see,” Kamdem said. He added that if interest rates continue to trend lower, that will provide an additional tailwind to earnings growth.
Among Kamdem’s other observations:
- Manhattan is “far and away the best office market,” particularly the Park Avenue, Midtown, Grand Central, Avenue of the Americas submarkets.
- San Francisco office is showing “some very encouraging signs,” while some of the Sunbelt’s core markets are showing signs that net absorption is starting to inflect positively.
- In terms of return to office momentum, “the big wave is done,” although gradual increases are still possible.
- On the West Coast, sublease availability is starting to come down, which “is a really good indicator about tenants' willingness to take on direct space.”
- In terms of supply deliveries, office is still one of the lowest of all the asset classes, with 1% or less of the existing stock being built.