Office Tenants Eye Ownership of the Properties They Occupy

In the office sector, owner-occupier deals are gaining momentum in the U.S. in response to falling property values, tighter capital and a broader economic downturn, the Urban Land Institute (ULI) reported. Tenants who leased their office space now looking to buy a building outright—at reduced prices and favorable terms—to reap the long-term benefits of property ownership. 

Citing data from JLL, ULI reported that these types of acquisitions accounted for 20% of total U.S. office sales in the first quarter of 2025, up from 15% for the 12 months of 2024. Before the pandemic, owner-occupier deals accounted for 8% or less annually. JLL also saw a 76% year-over-year increase in bid activity from tenants in 2024. 

“With this year’s owner-occupier transaction volume already above 2024’s total, user acquisitions are expected to remain a major force in the office market through 2025,” said Mike McDonald, senior managing director at JLL. 

A recent high-profile example in Los Angeles County’s acquisition of the Gas Company Tower in downtown L.A. The county had been exploring alternatives to costly seismic retrofits on its leased properties, and the newer, more modern Gas Company Tower offered a cheaper option.  

The opportunity arose after a Brookfield-managed fund chose not to extend its $784-million loan tied to the tower and another office building. The property then went into receivership in 2023 and was sold at auction in 2024. The county closed in December after paying $200 million for the trophy building, less than a third of its $632-million value four years ago. 

“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 top L.A. broker who recently launched his own advisory firm, Muhlstein CRE, told ULI, “It would’ve cost the county $1,500 a foot and years to rebuild its outdated, seismically vulnerable office spaces.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?” 

For some organizations, particularly those with stable growth or specific operational needs, ownership is becoming a preferred strategy, ULI reported. It helps tenants gain control, optimize their environment and secure their long-term presence in a market. 

McDonald says three main factors are driving the surge. First, there has been a significant basis reset in the office universe, with most office buildings across the country now selling below replacement cost. 

Second, tenants and users now have better visibility into their space requirements and growth needs, giving them confidence to make long-term real estate commitments. Conversely, for traditional property investors seeking tenants, it remains more challenging to anticipate a customer’s space requirements, as many companies are still navigating their evolving work setups and adapting to hybrid or remote work models. 

Lastly, with current market dynamics, tenants can obtain capital at corporate lending rates, which are significantly lower than those available to traditional investors. Organizations also can take advantage of more creative financing strategies, such as municipal bonds or balance sheet acquisitions, that aren’t typically available to investors. 

Between 2015 and 2019, major tech companies accounted for most of the building acquisitions made by tenants. That activity, however, has largely subsided since the COVID pandemic. McDonald told ULI that although some corporate users have returned to the office acquisition market, a new wave of buyers has also emerged, including counties, cities, state governments and users from the education and healthcare sectors. 

From a broker’s standpoint, owner-occupier sales can be both easier and more challenging. On the one hand, the tenant already knows the property’s worth and doesn’t need as much convincing as an out-of-town institutional investor might. On the other hand, tenants may know the real estate, but they don’t know real estate—i.e., what it takes to close a transaction. 

“So, there’s a little bit more hand-holding on our side, which can be advantageous to our clients,” McDonald told ULI. “But it does require more work.”