Are we there yet?

Return to office and its impact on commercial real estate investors.

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September 23, 2021 | 3 minute read

About this episode:

Phil Orban, Managing Director at Rialto Capital Management, an integrated real estate investment and asset manager, sits down with Steve Oblack, FS Investments Executive Director and Client Portfolio Manager, to discuss the status of returning to the office, what the future of work may look like and potential impacts on commercial real estate investors.

Transcript excerpt:  

Kara O’Halloran (00:05):

Welcome back to FireSide, a podcast from FS Investments. My name is Kara O’Halloran. I’m a Director on our Investment Research team. And while I think we always have really interesting topics, I think today’s conversation may be one of the most timely and relevant that we’ve had yet, and that is return to work. This has been the question over the last year and a half; bringing employees back to the office in a safe way has certainly been top of mind for many companies. It seemed like things were trending towards a return in September, but the delta variant had other plans for many companies. We talk about where the office sector is now, where it’s headed and what that may mean for investors.

Kara O’Halloran (00:40):

I could not have two more appropriate people to talk about this with. I am so excited to bring you this conversation between FS’s own Steve Oblack, who is an Executive Director on our Client Portfolio Management team, who specializes in commercial real estate, and Phil Orban, who is a Managing Director at Rialto Capital Management. Rialto is an integrated real estate investment and asset management company that invests and manages assets throughout the capital structure in real estate properties, loans and securities. I hope you enjoy the conversation.

Kara O’Halloran (01:11):

Steve and Phil, thanks so much for joining. I will let you guys take it away.

Phil Orban (01:15):

Great. Thanks, Kara.

Steve Oblack (01:15):

Thanks for having us.

Steve Oblack (01:17):

Yeah. Well, Phil, normally I would say nice to see you, maybe if we were doing this a couple years ago. But today, we’re not recording in the same room, which is perhaps apropos for our discussion. I believe you’re in your corporate office, while I’m still in my home office.

Steve Oblack (01:33):

While I definitely want to get to the outlook and the future of office, I thought maybe you could start for us by taking stock of what has taken place since the start of the pandemic. For me, when I’m talking with commercial real estate investors, from a pricing standpoint, things have remained fairly resilient through the COVID-19 pandemic. Maybe you could talk specifically about what’s gone on in the office sector over the last year and a half.

Phil Orban (02:03):

Yeah. Happy to, Steve. Great to connect. The good news is, we are going to see each other in person finally after what, two years or almost two years, so excited for that.

Phil Orban (02:13):

But it certainly goes without saying that office utilization has declined tremendously following the onset of COVID. While I am sitting in my office today, and at Rialto, we have been back in the office for quite some time now, that certainly varies greatly by industry and by market.

This information is educational in nature and does not constitute a financial promotion, investment advice or an inducement or incitement to participate in any product, offering or investment. FS Investments is not adopting, making a recommendation for or endorsing any investment strategy or particular security. All views, opinions and positions expressed herein are that of the author and do not necessarily reflect the views, opinions or positions of FS Investments. All opinions are subject to change without notice, and you should always obtain current information and perform due diligence before participating in any investment. FS Investments does not provide legal or tax advice and the information herein should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact any investment result. FS Investments cannot guarantee that the information herein is accurate, complete, or timely. FS Investments makes no warranties with regard to such information or results obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information.

Any projections, forecasts and estimates contained herein are based upon certain assumptions that the author considers reasonable. Projections are necessarily speculative in nature, and it can be expected that some or all of the assumptions underlying the projections will not materialize or will vary significantly from actual results. The inclusion of projections herein should not be regarded as a representation or guarantee regarding the reliability, accuracy or completeness of the information contained herein, and neither FS Investments nor the author are under any obligation to update or keep current such information.

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Kara O’Halloran, CFA

Director, Investment Research

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