To complicate matters, companies are assessing their office space needs as the work-from-home and work-from-office hybrid model becomes entrenched even after the pandemic. As a result, traditional offices built in the 1980s or 1990s will need to rethink the use of space, Kimble says.
Richard Kimble, lead portfolio manager and an executive officer for Nuveen Global Cities REIT, indicated in an interview late last year with The Edge Singapore that he has been negative towards the office sector in the US since 2017. When he started the Nuveen Global Cities REIT in 2017, he made a conscious effort to underweight the office sector.
According to Kimble, offices are the most expensive to run in the US. He says investors, be they funds or REITs, are only getting 65% to 70% of a building’s net operating income (NOI) because the remaining 30% goes to capital expenditures or tenant inducements unless they are brand new buildings.
