Trophy Towers Outperform as Office Market Splits in Two

• Suite spot: The office market is gaining momentum, but the gap is widening between thriving trophy assets and underperforming commodity space.

• Build slow and break things: Big tech companies are struggling to live up to their housing commitments in California’s regulatory environment.

• Inflationary pressure: The new inflation numbers and the threat of a lawsuit are making the Fed’s upcoming decision even harder.

• AI, data and energy: Webinar about how CRE asset managers are using AI and data tools to transform energy management. Sign up

• Office-to-residential conversion: Webinar on data-driven metrics and insights for profitable office-to-residential conversions. Sign up

Flash Poll

Still guessing what your parking lot could earn on a high-demand day? You’re not alone. Many property owners are exploring dynamic pricing, data insights, and tech upgrades to turn underused lots into high-performing assets. Take this quick poll, then see how smarter parking operations can boost revenue and improve the user experience.

Presented by AirGarage

Unlock Higher Parking Revenue with Dynamic Pricing

If your parking asset isn’t using dynamic pricing, you're leaving money on the table. AirGarage's AI-powered pricing engine adjusts rates in real time based on demand, seasonality, and local events—so your lot earns more during peak hours without lifting a finger.

Legacy parking operators rely on static pricing and manual rate changes that miss out on revenue spikes. AirGarage’s all-in-one parking management solution brings modern pricing optimization, streamlined operations, and lower overhead.

Property owners that switch see an average 23% NOI lift in year one.

Office

Trophy Towers Outperform as Office Market Splits in Two

The U.S. office market is riding its strongest first-half momentum since 2019, but the recovery is far from uniform. Leasing activity is up double digits compared to last year, driven less by organic job growth and more by companies tightening return-to-office mandates. While certain markets like Miami are approaching pre-pandemic attendance, others, especially on the West Coast, remain sluggish. The hoped-for surge in daily foot traffic has yet to fully materialize, though many landlords and tenants are betting on a post-summer bump as stricter policies kick in.

Space availability has started to retreat from its highs, slipping for two-thirds of tracked markets and hitting its lowest development pipeline in more than a decade. Trophy Class A assets continue to attract tenants, often without the aggressive concession packages weaker properties must offer to compete. A decisive “flight to quality” is underway, with financial services and insurance firms now leading the charge in large leasing deals, displacing the once-dominant tech sector. Investment sales are also showing signs of life, with more realistic pricing drawing in private buyers and owner-users, even as distress in the sector remains historically high.

For now, the market is split between buildings with the right location, design, and amenities—and everything else. Top-tier properties are holding rents and even posting modest gains, while commodity space faces an uphill battle against high availability and looming debt maturities. Whether this momentum carries into 2026 will depend on the delicate balance between corporate space strategies, the labor market’s health, and capital market stability. The gap between winners and laggards is poised to widen, setting the tone for leasing, investment, and development in the years ahead.

Overheard

Technology

Big Tech’s Housing Promises Stuck in Hard Regulatory Environment

In 2019, some of the world’s biggest tech companies rolled out billion-dollar affordable housing pledges to help address California’s worsening shortage. Apple committed $2.5 billion, Google and Meta each promised $1 billion, and the announcements generated plenty of good press. Six years later, delivery has been uneven. Apple has deployed more than $1.6 billion to support over 10,000 affordable units, as well as homelessness programs and down-payment assistance, but Meta has disbursed only about $200 million and Google still hasn’t started construction on any of the 12,900 approved homes tied to its pledge. Part of the problem isn’t the willingness to spend, but the difficult regulatory environment those dollars have to operate in.

Restrictive zoning rules, slow permitting, and community opposition can stall even the most ambitious projects. In some cases, companies are reevaluating their commitments. Google is exploring selling off land originally earmarked for housing. California seems to be a much harder place for these projects. In Washington, Microsoft has fully deployed its $750 million housing fund in the Seattle area, Amazon has spent $2.2 billion on housing near its hubs and is adding $1.4 billion more.

Apple's struggles show that private companies can speed up housing creation, but it can’t single-handedly overcome structural barriers baked into local development processes. Without regulatory reform, even billion-dollar commitments risk becoming stuck in the planning phase without providing immediate supply solutions. Success in this space comes not just from writing a big check, but from navigating—and sometimes reshaping—the policy landscape that governs where and how housing gets built.

Fed Is Faced With Difficult, Contentious Decision on Rates

Headline inflation stayed put at 2.7% in July, unchanged from June, as falling gasoline and grocery prices helped mask upward pressure from rising costs on certain imports linked to President Trump’s tariffs. Core inflation, which excludes food and energy, accelerated to 3.1% year-over-year, marking its highest rate in months.

The details reveal a shifting inflation landscape: while some tariff-affected goods like furniture, shoes, and appliances are seeing rising prices, service costs such as airline fares, medical and dental services are driving the bulk of core CPI growth. This suggests the cost-of-living crunch is spreading beyond goods and further complicating the macroeconomic picture.

The Federal Reserve finds itself in a bind. Inflation remains stubbornly above its 2% target, especially when stripping out volatile sectors, yet the labor market appears to be cooling, prompting markets to expect a rate cut as soon as September. Meanwhile, Trump has turned up his criticism of Fed Chair Powell, saying he was "considering allowing a major lawsuit." If signs are not clear, the Presidential Pressure could be enough to convince the Fed to lower rates a bit faster than they might otherwise.

Are You Enjoying This Newsletter?

Propmodo Daily is written and edited by Franco Faraudo with contributions from readers like you and the Propmodo team.

📧 Forward it to a friend and suggest they check it out.

🔗 Share a link to this post on social media.

🗣 Have ideas for future topics (or just want to say hello)? Share your feedback and tips at [email protected] or connect with us on X through @propmodo.

✅ Not subscribed yet? Sign up for this newsletter here.

📫️ Please add our newsletter email, [email protected], to your contacts to make sure you don’t miss any updates.

Enjoy reading about trends and innovation in commercial real estate? Subscribe to Propmodo.com for unrestricted access to reliable, data-driven journalism and exclusive insights available only to subscribers.