The Office Building sector will need to reconfigured to adjust to the new COVID “norms”. Wenston DeSue
Performance Metrics Continue to Buck Expectations
We had continued to project rising vacancy rates for the office sector through 2021, given uncertainty about return-to-office plans and ongoing concerns about the pandemic. This flew in the face of economic projections that called for economic growth of over 5.5% in 2021 – the highest rate of growth for US GDP since 1984. We evinced surprise when office vacancies began falling faster than many expected. They dropped in the third quarter by 30 basis points and again in the fourth quarter by 10 basis points, to end the year at 18.1%. The national vacancy rate is now 40 basis points lower than what may well be (in retrospect) the pandemic peak of 18.5%, recorded in the second quarter of 2021.
Asking and effective rents were basically unchanged at the national level, ending the fourth quarter at $34.46 PSF and $27.74 PSF, respectively. Year-over-year asking and effective rent growth rates of -0.2% and -0.8% paint the picture of a tumultuous period, with both types of rent posting positive (if marginal) increases in the middle of the year.
Cited: moodys.com
Wenston DeSue is a realtor, organizational consultant, design, construct, build expert and developmental networker. Real estate is the business of exchange and affects every person on the planet. Real estate on all levels represents resources, access, purpose and often times, power. These articles represent aspects that affect the business of real estate.
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