Office REITs, Dexus, DXS

Interesting commentary coming out of New York, adds support to our office note from last week.

Recall that NY city has been one of the “hardest hit”, for office space vacancies. Now we are hearing that return-to-office has hit 70% (i.e., office visitations as a % of 2019 level).

This is definitely good news, if you have any opportunistic office-centric REIT plays on in the portfolio (for us, Dexus, and perhaps less directly, Lendlease).

We’ve talked before about office-to-apartment conversions. They weren’t much of a thing in 2021-2022, but started to become meaningful in 2023 and that is slated to continue (based on submitted plans) into 2024.

Given that OTA’s were meant be difficult (due to regulation and engineering issues) the fact that it is happening is also good news (human ingenuity for the win).

None of this cures offices’ ills overnight, but it all helps, and given that office and office adjacent businesses like DXS, CHC, LLC have been sold off very heavily, it is taken constructively as a result.

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