Revisiting Office Underwriting Assumptions

Research evidence excerpt

Revisiting Office Underwriting Assumptions

Real Estate | REITs

June 14, 2026

Steve Sakwa Revisiting Office Underwriting

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Steve.Sakwa@evercoreisi.com Assumptions

James Kammert REITs spent the week balancing a more resilient growth story

312 705-4233 against the familiar constraint of still-elevated rates. After all,

james.kammert@evercoreisi.com REITs outperformed the broader market with a weekly return of

Manus Ebbecke, CFA 2.4% vs. just 0.7% from the S&P 500 as SpaceX completed its

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Manus.Ebbecke@evercoreisi.com $75bn IPO late in the week.

Michael Griffin, CFA The inflation data did little to deliver an “all clear” signal from the

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Michael.Griffin@evercoreisi.com Fed as headline CPI moved higher and PPI reinforced that the

cost side of the real estate equation remains sticky, particularly

for construction, utilities and development underwriting. At the

same time, the labor market continues to refuse the more

bearish slowdown narrative, with payroll growth still positive and

unemployment stable, helping preserve demand visibility across

residential, retail and even parts of office.

That leaves the sector in a nuanced position. The 10-year

Treasury eased late in the week, offering some support to REIT

valuations, but absolute rate levels remain high enough to keep

pressure on refinancing costs, cap rates and external growth.

Housing data told a similar story as elevated mortgage rates

continue to support rental demand, but affordability constraints

and weaker transaction activity remain headwinds. The Fed now

becomes the next key catalyst, with no rate change expected

but the updated dot plot and guidance likely to determine

whether the recent REIT bid can extend late into Q2.

Fundamentally, the Beige Book was neither euphoric nor