Opportunities in the Office Sector: A Q&A with Dan Domb, Managing Member and COO at Rockpoint

Published in IREI Newsline

By Andrea Zander

Over the past several years, the office sector has faced challenges from shifting tenant preferences, the persistence of hybrid work, and a reset in valuations driven by higher interest rates and capital market caution. Dan Domb, who serves as managing member and COO of Rockpoint, shares how the firm sees an investment window for high-quality, well-located office assets, particularly in strong submarkets like Midtown Manhattan. The firm emphasizes a highly selective, data-driven approach, focusing on markets with resilient demand drivers and assets where hands-on management can unlock value.

Domb is responsible for overseeing Rockpoint’s operational activities and overseeing Rockpoint’s investment and asset management activities in the greater New York and Florida markets.

What is Rockpoint seeing in terms of office sector investing?
As readers will clearly know, the last five years have been extraordinarily challenging for the office sector, both in terms of tenant demand and in terms of how office is perceived by the debt and equity capital markets. COVID completely upended tenant preferences for office space, which continues to be a challenge, particularly as work from home and hybrid work both persist to varying degrees across markets. This dynamic, combined with the current higher interest rate environment, as well as capital markets preferences for asset types with less predictable cash flow profiles, has created a significant reset in valuations for office space across markets. While there is a subset of lower-quality office space that will continue to experience leasing challenges for some time, the dislocation in this asset class has created a unique window for experienced managers to very selectively acquire institutional-quality, well-located assets at attractive entry points.

What market dynamics are compelling for office investment today?
In many markets, there is a very significant bifurcation between submarkets with respect to post-pandemic demand recovery. New York City is a good example of this, where, for example, very specific areas within Midtown are showing real strength. Trophy and “survivor” buildings — those that are either best-in-class or have been recently upgraded — are experiencing solid demand, with asking rents at or near all-time highs and vacancy rates well below the citywide average. The city’s diverse economy, deep talent pool and status as a global business hub continue to attract tenants, particularly large companies seeking high-quality space. Additionally, the bifurcation in the market means that well-located, well-managed assets are outperforming, and we see continued tenant demand outpacing supply in Midtown and other core areas.

What are the dynamics that make certain markets less compelling?
We at Rockpoint focus on deploying capital only where we see a clear path to both operational improvement and market-driven rent stability. Today, these factors are less evident in markets experiencing slower job growth, more persistent work-from-home policies, greater government-driven demand and a surplus of commodity office product that lacks the tenant demand we see in certain very specific submarkets in New York City (as mentioned). Additionally, given increases in tenant improvement allowances in most markets, we are also highly focused on underwriting new office investments not based on cap rates but based on free cash flow, both to Rockpoint and to the next buyer.

What success factors does Rockpoint see as critical to investment in the office sector in today’s environment?
Being incredibly selective in identifying new investment opportunities and being hands-on in creating and effecting a value creation plan once an asset is acquired are both absolutely critical in today’s environment. Through Rockhill, our property services affiliate, we directly manage and execute asset-level business plans. This vertical integration allows us to implement capital improvements, drive leasing, optimize operating expenses and respond quickly to market shifts. Our track record shows that hands-on management leads to better tenant retention, higher occupancy and ultimately stronger investment performance. Especially in office, where tenant needs are evolving rapidly, having boots on the ground and direct control over operations is a key differentiator.

How does Rockpoint identify which office assets and markets are attractive in the current cycle?
We employ a granular, data-driven approach — analyzing not just macro trends but also micro-market dynamics and asset-specific characteristics. We focus on markets and submarkets with diverse demand drivers, strong office-using job growth and supply/demand imbalances that favor landlords. Ultimately, it’s about finding unique situations where our expertise and active management can unlock value that the broader market is overlooking.

What is Rockpoint’s outlook for the office sector over the next several years?
We believe there will be continued bifurcation — best-in-class assets in top markets will outperform, while commodity and obsolete buildings will face ongoing challenges. The sector will continue to face headwinds, but for those with experience, local knowledge and operational capabilities, there could be compelling opportunities. We are prepared to be patient and disciplined, investing only where we see a clear path to value creation and strong risk-adjusted returns. Our conviction is that this is a “sharpshooter” market — success will come from selectivity, focus, and hands-on execution.