**Office Tenants Eye Property Ownership Amid Market Shifts**
In a changing commercial real estate landscape, U.S. office tenants are increasingly shifting from leasing to ownership, seizing opportunities presented by declining property values, tighter credit conditions, and ongoing economic uncertainty. According to the Urban Land Institute (ULI), owner-occupier transactions are gaining momentum as organizations aim to reap the long-term benefits of owning the space they occupy.
Citing data from global real estate services firm JLL, ULI reports that owner-occupier purchases accounted for 20% of all U.S. office sales in Q1 2025—up from 15% in 2024. Before the pandemic, such transactions made up just 8% or less of annual deal volume. Notably, there was a 76% year-over-year increase in bid activity from tenants in 2024.
“With this year’s owner-occupier transaction volume already exceeding the total for 2024, user acquisitions are expected to remain a major force in the office market through 2025,” said Mike McDonald, Senior Managing Director at JLL.
A prominent example of this trend is Los Angeles County’s recent acquisition of the Gas Company Tower in downtown Los Angeles. Looking to avoid the high costs of seismic retrofitting on leased buildings, the county opted to purchase the more modern tower, which required fewer upgrades. The opportunity emerged after the previous owner—a Brookfield-managed fund—chose not to extend its $784 million loan tied to the tower and another office property, leading to a foreclosure and auction sale.
The county secured the property in December 2024 for just $200 million—less than a third of its $632 million value in 2020.
“Since the modern high-rise requires relatively less retrofitting than the aging leased spaces, L.A. County’s transition from renter to owner will potentially save hundreds of millions of dollars over the long term,” according to ULI.
Carl Muhlstein, a veteran Los Angeles broker and founder of Muhlstein CRE, explained the county’s strategic decision: “It would’ve cost the county $1,500 a foot and years to rebuild its outdated, seismically vulnerable office spaces. Instead, they bought a tower for less than $200 a foot that needs some work, but how do you argue with that these days?”
Ownership is increasingly attractive for organizations with stable growth and specific space requirements. According to ULI, the shift offers control, fosters long-term occupancy, and optimizes operational environments.
Three key factors are fueling the wave of owner-occupier transactions:
1. **Market Valuation Reset**: Many office buildings are now selling below replacement cost, creating value-buy opportunities.
2. **Clarity in Space Needs**: Tenants now have greater certainty about their long-term space requirements, making ownership a more confident investment compared to leasing.
3. **Favorable Financing**: Owner-occupiers can secure capital at lower corporate lending rates and explore creative financing strategies, such as municipal bonds or on-balance sheet acquisitions—options typically unavailable to traditional investors.
Between 2015 and 2019, the majority of tenant acquisitions came from major tech firms. Although that activity has cooled since the pandemic, a new cohort of buyers has emerged, including municipal agencies, educational institutions, state governments, and healthcare providers.
From a brokerage perspective, these deals present a mixed bag. On one hand, tenants are often already familiar with the property, minimizing the need for extensive due diligence. On the other hand, many organizations lack experience in navigating complex property transactions.
“There’s a little bit more hand-holding on our side, which can be advantageous to our clients,” McDonald noted. “But it does require more work.”
As the office market continues to adapt, the growth of owner-occupier deals underscores a broader transformation in how organizations view and manage their real estate assets.
