The TreppWire Podcast: A Commercial Real Estate Show 389. Why Smart Capital Is Still Betting on Office with Mike McDonald, JLL Capital Markets
Apr 14, 2026
Mike McDonald, Senior Managing Director at JLL Capital Markets and office investment veteran, outlines why he still backs office assets. He explains JLL’s new tiering system, three core investment strategies, and why select Sunbelt markets like Dallas and Austin shine. AI’s role and the case for targeted new development also come up.
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Episode notes
Office Tiering Replaces Class Labels
- Office needs objective stratification not Class A/B labels to capture performance differences.
- Mike McDonald describes JLL's four-tier system (tiers 1–4) across 2.5B sq ft in 20 MSAs, with tier one as 2015+ high-quality buildings and tier four as 1980s/90s vintage bombers.
Office Offers Contrarian Alpha Now
- Office is the best source of alpha over next five years due to mispricing versus industrial and multifamily.
- McDonald outlines three paths: buy high‑quality assets for cap‑rate compression, operationally reposition lower quality assets, and targeted new development in growth markets.
Buy High Quality Assets At Dislocated Yields
- Buy stabilized tier one/tier two assets at dislocated cap rates and hold through cap‑rate compression.
- Example: purchase a 95% leased building at a 7% cap and sell later at 6.5% after leasing mark‑ups and market recovery.