Originally published by Michael Tucker on February 23, 2021, for Newslink.com
The office market has seen less deterioration during the pandemic recession than it did during the Great Recession, but it’s not out of the woods yet, reported Moody’s Analytics REIS, New York.
The national vacancy rate for the office sector reached 17.7 percent in late 2020, a 90 basis point full-year increase. By comparison, vacancies rose by nearly 200 basis points in 2008, followed by a 250 basis point increase in 2009, said Moody’s Analytics REIS Head of Commercial Real Estate Economics Victor Calanog. He noted the national office vacancy rate did not top out until late 2010 and increases added up to 500 basis points before starting to gradually decline in 2011.
“That means the true impact of this downturn will likely transpire this year,” Calanog said. He said the office market is in “a relative holding pattern” at the moment. “Forecasts suggest that given typical lags, vacancies for the office sector will continue to rise even after the economy begins growing at a consistent rate,” he said. “But few things about this downturn can be called ‘typical,’ and our current outlook suggests that vacancies will incur its largest increase this year.”