August 2025

North America

·Canadian pension funds report negative returns in real estate investments despite overall gains. The Ontario Teachers’ Pension Plan (OTTP) reported a 2.1% net return for the first half of 2025, even though its real estate assets fell 2.4% to $28.8 billion, roughly 11% of its $269.6 billion total portfolio. The decline mirrors trends at other Canadian pension funds, including CDPQ, which posted an 11% overall return despite a 10.8% drop in its real estate holdings, and the British Columbia Investment Management Corp., which achieved a 10% total return while its property assets fell 1.8%. Similarly, the Public Sector Pension Investment Board recorded a 12.6% return on its global portfolio despite flat real estate performance. OTTP’s real estate arm, Cadillac Fairview, continued strategic acquisitions in Europe, buying residential properties in Stockholm and a 92,000-square-metre logistics portfolio in Sweden and Denmark from a Blackstone fund. Its Canadian portfolio includes prominent office towers and shopping malls such as 160 Front Street in Toronto and CF Toronto Eaton Centre. The mixed results highlight a growing divergence between overall portfolio performance and property investments, reflecting broader market challenges in office and retail sectors. Analysts note that while real estate continues to provide diversification, short-term valuation swings can significantly impact reported returns across pension funds. (Source: CoStar, Ontario Teachers’ Pension Plan, 2025)

Ontario Teachers’ Pension Plan Board HQ in 160 Front St. West in Toronto.

·RXR acquires former IBM building in Manhattan for $1.08 bil in largest Manhattan office deal since 2022. Real estate investment firm RXR has purchased 590 Madison Avenue, a 1 million-square-foot, 42-story Class A tower formerly known as the IBM Building, from the State Teachers Retirement System of Ohio for $1.08 billion. According to CoStar data, this is Manhattan’s largest office transaction since March 2022 and the largest “full asset, non-user driven” acquisition since March 2018. RXR executed the purchase as part of its “office recovery strategy,” targeting trophy office properties at discounts to peak valuations, with financing backed by Apollo Global Management and in partnership with Elliott Investment Management. The property has undergone a $100+ million renovation, including a $400+ million Madison Avenue Club amenity suite, and has attracted over 300,000 square feet of new leases, with tenants such as Apollo, Tiger Management, Louis Vuitton, and Bucherer. RXR noted that Manhattan’s Plaza District and major transit-adjacent trophy offices are seeing strong leasing momentum, driven by a shrinking supply of high-quality office space. Eastdil Secured represented the seller, while Newmark advised RXR on equity capital. The transaction underscores investor confidence in premium office properties amid broader market bifurcation. (Source: RXR, CoStar, 2025)

RXR acquires 590 Madison Avenue in Manhattan.

·SL Green, RXR and NY REIT’s Worldwide Plaza valuation declines $1.4 billion as Midtown Manhattan office crisis deepens even for senior CMBS noteholders. Worldwide Plaza’s market value has plunged to $345 million, an 80% collapse from its $1.7 billion peak in 2017—and below its original 1988 construction cost. The 1.8M sf Midtown tower, owned by SL Green, RXR, and the liquidating New York REIT, is 40% vacant after Cravath exited 600,000 sf, while anchor tenant Nomura could walk from its 700,000 sf lease in 2027. Re-tenanting is estimated to require $400M in capex, but the property is already burdened by $940M in CMBS debt and $260M of mezzanine financing. That debt stack is wreaking havoc in securitization markets: the loan is in special servicing, reserves have been tapped to cover shortfalls, and junior bondholders face wipeouts. Even senior tranches once rated AAA are trading at steep discounts, with Class B in the 40s and Class D near zero. The case underscores how CMBS slicing shifts risk across investors—senior noteholders may recover modestly, but mezz and subordinate positions are effectively worthless. Worldwide Plaza has a storied boom-bust history: built for $650M in 1988, sold to Blackstone in the ’90s for $375M, flipped to Macklowe for $1.7B before the GFC, and recapped by SLG/RXR in 2017 at the same mark. Its current collapse highlights Midtown’s broader reckoning, where debt-heavy legacy towers can no longer compete with newer, amenity-rich buildings—and where even trophy assets can’t support their capital stacks. (Source: CRE Analyst, The Real Deal, Bloomberg, 2025)

Worldwide Plaza CMBS debt originated by Goldman Sachs and Deutsche Bank trading at cents on the dollar

·Agency executives all raise outlook for commercial real estate for the first time since 2020. After years of pandemic-related uncertainty, the five largest commercial real estate services firms — CBRE, JLL, Cushman & Wakefield, Colliers, and Newmark — all raised their financial outlooks for 2025, marking the first time since 2020 that all five have done so in the same quarter. Rising commissions from property sales and leasing, along with increased financing and property management fees, contributed to strong second-quarter results.Executives report a sustained recovery in office markets, particularly in trophy and Class A properties near major transit hubs, with activity spreading to well-located second-tier buildings. Return-to-office mandates from major employers like JPMorgan Chase, Amazon, and federal agencies have spurred more long-term leasing decisions. While headwinds remain — including high national office vacancy rates above 14% and ongoing high interest rates limiting sales activity — leasing momentum is strong. REITs such as Piedmont Realty Trust and Hudson Pacific Properties are reporting their strongest leasing activity since the pandemic. Analysts describe the market as being in the “early innings of a strong capital markets recovery,” with confidence growing among buyers, sellers, and tenants. (Source: CBRE, JLL, Cushman & Wakefield, Colliers, Newmark, CoStar, 2025)

Chicago’s West Loop attracting top lease deals as demand for trophy office space in the best locations increase.

·AI tenants push east: New York office market gets boost. The surge in artificial intelligence leasing, once concentrated on the U.S. West Coast, is spreading quickly to New York. Tempus AI will double its footprint by moving into 39,600 square feet at SL Green’s 11 Madison Avenue, while Sigma, Harvey AI and Synthesia have all signed major expansion deals across Manhattan. Collectively, these commitments highlight AI’s central role in driving office demand. CBRE data shows U.S. tech leasing rose 21% year-over-year in Q1 2025, reaching nearly 8 million square feet — around 16.5% of total leasing volume — up from just 14% in 2023. In San Francisco alone, AI companies now occupy more than 5 million square feet, with forecasts suggesting this could quadruple to 21 million by 2030. Landlords such as SL Green and Kilroy note AI tenants often outgrow space within a year, pushing rapid expansions across coastal markets. With this acceleration, New York is emerging as the East Coast counterpart to Silicon Valley’s AI-fueled real estate boom. (Source: SL Green, CoStar, CBRE, 2025)

Tempus AI is relocating its Manhattan offices to 11 Madison Avenue (New York) as it roughly doubles its office footprint in the city.

Europe

·Canary Wharf office market sees first value rise in three years. For the first time in three years, Canary Wharf office values are showing signs of recovery. A £2bn portfolio covering roughly half of Canary Wharf Group’s offices rose 0.6% between March and June, following 11 quarters of flat or falling valuations. Leasing activity is strong, with HSBC taking 210,000 sq ft at 40 Bank Street, JP Morgan leasing 150,000 sq ft of overflow space at One Cabot Square, Revolut taking 113,000 sq ft at the YY Building, Barclays renewing roughly 1m sq ft at 1 Churchill Place, Morgan Stanley recommitting to 547,000 sq ft at 20 Bank Street, and Visa in talks to relocate 170,000 sq ft to One Canada Square. Limited supply of top-quality office space, combined with higher in-office attendance and improvements to the district’s amenities, is supporting stronger rents and valuations. CWG’s broader strategy of introducing restaurants, shops, and residential offerings is boosting footfall, up to 72 million in 2024. Overall, Canary Wharf is showing early signs of sustainable recovery, with leasing momentum and asset values moving in a positive direction. (Source: Financial Times, Green Street, Canary Wharf Group, 2025)

HSBC to take 210,000 sq ft at 40 Bank Street (Canary Wharf), after deciding to take 556,000 sq ft in Panorama, St Paul’s (City)

·Hines returns to buying London offices with £185m City office purchase for 5.9% yield. Global investment manager Hines is making its first London office acquisition in two years, agreeing to buy Worship Square in the City from HB Reavis for around £185 million. The newly built, 140,000 sq ft office is fully let and located next to Broadgate. The deal reflects a 5.9% yield, positioning it as one of the more attractive core office trades in 2025. HB Reavis originally financed the project with a £100m BentallGreenOak development loan in 2022, later refinanced through a £106m green loan from HSBC at the end of 2024. The development qualifies as a green asset thanks to its EPC A rating, full electrification, and sustainable design features such as air source heat pumps and rooftop photovoltaic panels. For HB Reavis, the sale allows the recycling of proceeds into its development pipeline, consistent with its capital rotation strategy. For Hines, the purchase contrasts with its recent activity on the sell-side. The firm is still marketing Grainhouse, its Covent Garden HQ, for £153m at a 4.5% yield, and is reportedly in advanced talks to sell The Burlian—its redevelopment at Bond Street and Oxford Street—for c.£200m at a sub-3% yield. The transaction underscores a two-speed London office market: sustainable, well-let, prime-located assets are continuing to draw deep-pocketed investors at competitive yields, while older, secondary offices remain challenged by high vacancy and capex requirements. (Source: Green Street, Hines, 2025)

Hines’ most recent acquisition of Worship Square from HB Reavis in the City of London

·Blackstone hands over Dublin office assets to lender amid market headwinds. Blackstone has agreed to a consensual handover of three remaining Dublin office assets from its Cedar portfolio to lender Starwood Capital. The Cedar portfolio was originally acquired from Starwood for €535m just before Covid, with Starwood providing a circa €70m mezzanine loan, placing it as junior lender in the capital stack. Two other assets from the portfolio were sold in 2021–22, leaving these three properties as Blackstone’s remaining Dublin office exposure. The decision comes after a challenging period for Dublin offices: higher interest rates and weakening tenant demand, especially from large tech firms, have weighed on capital values. Blackstone wrote down its remaining £92m equity in the portfolio to zero last year and opted not to inject further capital, signaling a strategic exit rather than a market bet. The handover will be managed in an orderly and consensual manner, with Starwood overseeing the transition. Pat Gunne, an experienced Irish operator, has been lined up to advise on the portfolio’s future management and leasing strategy. A Blackstone spokesperson emphasized that such exits are extremely rare in its $600B global portfolio, and the firm now has minimal exposure to Dublin offices. (Source: Green Street, Blackstone, The Sunday Times, 2025)

Three Dublin office assets remain in Cedar portfolio as Starwood takes control.

·Starwood acquires EUR 350m German warehouse portfolio for 5.9% gross yield. Starwood Capital has agreed to acquire the Helix German warehouse portfolio from Palmira and Nuveen for around €350 million, marking its first direct logistics investment in Germany. The portfolio comprises 12 fully-let warehouses totaling 331,000 sq m (3.5 million sq ft), generating annual rent of €20.5 million, which implies a net initial yield of approximately 5.9%. Assets are spread across Germany and leased to a diverse range of tenants, including DHL in Greven (59,000 sq m), BMW in Niederviehbach (13,900 sq m), Daimler in Bremen (35,000 sq m), Mann + Hummel in Niederaichbach (40,000 sq m), Dedon in Winsen (12,900 sq m), and several other logistics and industrial operators. The deal follows a seven-month bidding process involving international investors such as Barings, Mapletree, Blackstone, and Garbe and is expected to close within six to eight weeks. Starwood’s acquisition comes after the portfolio’s previous price expectation of €400 million was adjusted downward amid market headwinds, including rising interest rates and geopolitical uncertainties affecting bids. This transaction strengthens Starwood’s European logistics footprint, complementing its €1 billion warehouse portfolio in northern Italy, and reflects growing investor demand for stable, income-generating logistics assets across Germany. The deal also positions Starwood to pursue further acquisitions in the German logistics sector. (Source: Green Street, Starwood, 2025)

12,900 sq m asset in Winsen, south of Hamburg, leased to Dedon is part of the warehouse portfolio acquired by Starwood.

·Regional UK offices see renewed investor interest. Over £200m of UK regional offices are currently on the market, attracting a diverse pool of buyers including private equity, family offices, institutional capital, and even unconventional investors. Recent deals in Birmingham, Glasgow, Manchester, and Bristol highlight activity from Melford, STR Capital, Ekistics, and Farran Investments, with yields ranging 8–11% and some value-add opportunities higher. Melford alone has deployed nearly £180m on Manchester and Bristol assets, while Time Equities and Baumont Real Estate have targeted repositioning plays. Institutional capital is returning, with Investec Bank’s Realis strategy and Strathclyde Pension Fund actively buying, and French SCPI funds selectively entering regional cities. Notable leftfield deals, like Princes’ £57m Liverpool purchase, demonstrate that even non-traditional buyers are participating. Significant assets remain available, including Starwood’s St Vincent Plaza in Glasgow, M&G’s Exchange Plaza in Edinburgh, and Peter House in Manchester, signaling opportunities for yield-hungry investors. With new listings expected in September, the market is set for a busy autumn, testing whether this backlog of regional offices can be absorbed efficiently. (Source: Green Street, 2025)

Ekistics, investment platform for High Net Worth Individuals, beats Martley Capital to the purchase of Birmingham’s Priory Court and The Lewis Building.