Offices Under Pressure, Logistics on the Rise: A Pivotal Week in the Global Real Estate Market

Offices Under Pressure, Logistics on the Rise: A Pivotal Week in the Global Real Estate Market

Analyses GRI Institute analyses based on Savills data show^[1] that office take-up in Europe is expected to grow by around 3% year-on-year in 2026, the strongest increase since 2022. However, this improvement concerns a narrow segment of modern Class A offices compliant with ESG standards and located in central business districts. An estimated 90% of the existing office stock – older, less well-located buildings – remains “value-challenged,” meaning it has a structural issue with value and demand. Forecasts predict a 3.7% growth in prime rents in 2026, particularly in London, Frankfurt, and Munich, alongside pressure on secondary asset valuations and stricter bank requirements regarding technical standards and energy efficiency in refinancing.

European Offices and the Role of Stable Rates

The European Central Bank’s decision to keep the main refinancing rate at 2.15% and the deposit rate at 2.0% reduces uncertainty about debt costs and helps^[3] close investment transactions in Europe. According to the GRI Institute, stable rates contributed to approximately 29% growth in the number of pending commercial transactions year-on-year in Europe. In this environment, Warsaw advanced to 3rd place among^[6] the most attractive investment cities in Europe – behind London and Madrid, ahead of Paris and Berlin. Investors highlight lower financing costs, attractive entry levels, limited new supply, and a strong warehouse market as the main arguments favoring the Polish capital.

Warsaw Advances, US Battles Debt

Across the Atlantic, data from MSCI and Trepp, cited by Traded.co, confirm record tensions in the office segment^[11]. The delinquency rate on office loan repayments secured by US CMBS reached 12.34%^[11], marking the highest level in the history of the series and exceeding the peak of the 2008 crisis.

At the same time, a KBRA report indicates that the overall delinquency rate^[12] in CMBS fell to 7.5% in February, and the total “distress rate” (delinquencies plus special servicing) dropped to 10.3% thanks to modifications of several large office loans, such as the 810 million financing of One New York Plaza and loans on 3000 Post Oak and 7700 Parmer. Concurrently, Starwood European Real Estate Finance Limited announced the repayment^[15] of its last loan secured on a portfolio of offices in Spain, completing the orderly liquidation of the portfolio and returning £376 million to shareholders, which corresponds to 91% of the net asset value as of January 31, 2023^[17].

Capital Flows Into Logistics and Specialist Projects

Amid office sector struggles, a clear shift of capital toward logistics is visible. Capita. Land Ascendas REIT announced its first acquisition in Spain^[18] – the purchase of a portfolio of six fully leased Class A warehouses in Madrid and Barcelona with a total area of 98,825 sqm for approximately SGD 185.4 million (around €124 million), at a 5.9% discount to the €131.7 million valuation. The portfolio features 100% occupancy, average WALE of 9.1 years^[20] and an expected annual NPI yield between 6.3% and 6.5%.

Savills data confirm a broader trend^[24]: in Q4 2025, industrial & logistics investment volume in Europe reached €13.6 billion, up 40% quarter-on-quarter and the best result outside 2021. Logistics accounted for 22% of total real estate 2025, with an average prime yield of about 5.25% and strong volume growth in countries including the Czech Republic (+213%), Portugal (+114%), and Poland (+25% year-on-year).

Tensions in the PRS Segment and Rising Construction Costs

Alongside logistics, capital also flows to specialized mixed-use and entertainment projects. Bally’s Corporation finalized the purchase from New York City^[29] of a roughly 16–20-acre plot in the Throggs Neck neighborhood of the Bronx, part of the Golf Links at Ferry Point, for about $156.6–157 million. The site is slated for development of a casino-hotel complex valued at approximately $4 billion with a total built area of 3 million square feet (around 279,000 sqm), including a 500,000 sq ft casino, a hotel with 500 rooms, a 2,000-seat event hall, and garages for about 4,660 cars. The project is one of three candidates for a new casino license^[32] in New York and illustrates the growing importance of multifunctional entertainment destinations in major metropolitan areas.

At the same time, the first clear signs of tension appear in the US PRS and multifamily segment. Multifamily Dive reports a transition to special servicing of the^[38] Singer Bronx Multifamily portfolio, which includes five buildings and 291 rent-stabilized units in New York, owned by Barry Singer, as well as The Riley project in Richardson, Texas, comprising 262 apartments. Valuation of the project assuming tax exemption reaches $83.1 million, while it falls to $65.6 million without tax preferences, showing the sensitivity of value to changes in fiscal environment. These tensions are compounded by a sharp rise in construction costs: S&P Global Market Intelligence rose to 62.6 points in February 2026^[39], with expectations for the next six months reaching 75.6 points, indicating further increases, particularly in steel and structural components. Multifamily construction costs in the US are already over 30% higher^[40] than five years ago, and labor costs have risen over 20% in that period, limiting new supply and favoring projects with long leases and rent indexation, including logistics and stable PRS platforms also in Poland and Central-Eastern Europe.

Related posts:

European Offices and the Role of Stable Rates

Warsaw Advances, US Battles Debt

Capital Flows Into Logistics and Specialist Projects

Tensions in the PRS Segment and Rising Construction Costs

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