Hudson Pacific’s Q1 Was The Whole 2026 Office Story In One Earnings Report

If you stopped reading there, you'd think the office REIT recovery is on, the leasing is back, and the worst is past.

Then you get to the footnote.

A major loan maturity tied to HPP's Hollywood Media portfolio is hitting later this year. Management has been openly discussing the conversation with the lender. Netflix's long-term space needs are still being negotiated. The cap stack underwritten in a different rate environment doesn't care that the operating story is improving.

That right there is the whole 2026 office story. Operating health is up. Capital health is a separate question entirely. And for a lot of office, those two things aren't going to land in the same place.

What's Happening

Office REIT Q1 earnings season is wrapping up and the same pattern keeps showing up. Leasing is better. Demand is back. The data we track inside our own portfolio agrees.

Visitor traffic across our buildings is on an accelerating curve. January was the baseline. February stepped up. March doubled it. April was up about 85% over March and roughly four and a half times the January number. Each month bigger than the last.

That's not occupancy. That's not door unlocks. That's people from outside choosing to walk into the building. Clients, candidates, vendors, investors. The cohort that can't be mandated in. The buildings are alive.

But "alive" doesn't pay off a 2021-vintage loan. The cohort of office assets financed in 2020–2022, at rates that no longer exist, on cap rates that no longer exist, are going to confront that math whether the building is alive or not. HPP's strong operating quarter and the looming Hollywood Media maturity sitting in the same press release is what that looks like in practice.

Why It Matters

For three years the bifurcation story in office has been about asset quality. Trophy vs commodity. Class A vs Class B. That story is real but it's incomplete.

The bifurcation that's actually going to define the next 24 months is between buildings that can be refinanced and buildings that can't. And those two columns don't line up cleanly with trophy vs commodity. A Class A building with a 2021 loan and a tenant whose long-term needs are uncertain is in trouble. A Class B building owned outright by a patient sponsor is fine.

The capital structure underneath the asset is now driving the outcome more than the asset itself.

Leesman has been measuring this from the experience side for over a decade across more than 1M workplace responses. The buildings with the highest scores aren't the ones that can refinance. They're the ones employees prefer. Those are correlated but they aren't the same thing. A great building owned the wrong way is still going to default.

What to Do

Three moves for anyone holding, buying, or operating office in 2026.

First, separate operating diligence from capital diligence. The trade press is going to keep cheering operating beats. That's fine. But underwrite the cap stack separately. The 2021 loan is the real story.

Second, if you're acquiring, the distressed inventory coming this year isn't all bad buildings. A good chunk is fine buildings with broken capital structures. Those are the best risk-adjusted opportunities in office in a decade.

Third, if you're operating, get visitor traffic and behavioral data into your asset reporting now. When your lender asks why the building is worth what you say it's worth, "occupancy is 88%" isn't an answer anymore. They've seen 88% occupancy buildings die. The question they're asking is whether the building is alive. Show them the trend.

HPP's Q1 was a beat. The loan still needs to get done. Those two things are going to keep showing up in the same press release across this sector for the rest of the year.

The office is recovering. The 2021 cap stacks aren't.

Anyways. The operating story finally turned. The financing story is the one to watch now.