The work from home trend will continue to put pressure on the office real estate market, with peak vacancy of between 22% and 28% in 2026, according to a forecast by Moody’s.
“The discourse around the purported benefits of in-office work, emphasized by some CEOs, has been prominent in the media,” Moody’s says. “Nevertheless, the argument for maintaining or even increasing remote work practices remains compelling for many businesses. If productivity remains stable and costs can be reduced by forgoing physical office spaces, the rationale for mandating in-office attendance diminishes.”
The base model forecast indicates that the impact on office demand from work from home will be around 14% on average across a 63-month period, resulting in vacancy rates that peak in early 2026 at approximately 24% nationally, Moody’s says. The vacancy rate could reach as high as 28% in the highest-case scenario.
Moody’s forecasts that higher vacancy rates will cut revenue for office landlords by between $8 billion and $10 billion by 2026. That could cause property value deterioration in the range of a quarter-trillion dollars.
Related Stories
Office Buildings | Mar 3, 2015
Former DuPont lab to be converted into business incubator near UPenn campus
The new Pennovation Center will provide collaborative and research spaces for educators, scientists, students, and the private sector.
Office Buildings | Mar 1, 2015
Google unveils dramatic tent-like, modular-focused plan for corporate HQ
The master plan by Bjarke Ingels and Thomas Heatherwick will wrap highly flexible office blocks in soaring translucent canopies.
Office Buildings | Feb 26, 2015
Using active design techniques to strengthen the corporate workplace and enhance employee wellness
The new Lentz Public Health Center in Nashville, Tenn., serves as a model of how those progressive and healthy changes can be made.
Sponsored | Shopping Centers | Feb 26, 2015
A color-changing gateway for Altara Center
Valspar works with developers to complete a multicolored shopping center façade in Honduras.
Office Buildings | Feb 23, 2015
The importance of quiet and the consequences of distraction
Recent work style studies show that the average knowledge worker spends 25-35% of their time doing heads-down focused work. Once thrown off track, it can take some 23 minutes for a worker to return to the original task.
Codes and Standards | Feb 18, 2015
USGBC concerned about developers using LEED registration in marketing
LEED administrators are concerned about a small group of developers or project owners who tout their projects as “LEED pre-certified” and then fail to follow through with certification.
Office Buildings | Feb 18, 2015
Commercial real estate developers optimistic, but concerned about taxes, jobs outlook
The outlook for the commercial real estate industry remains strong despite growing concerns over sluggish job creation and higher taxes, according to a new survey of commercial real estate professionals by NAIOP.
Office Buildings | Feb 18, 2015
Why the mobile workplace isn't always mobile
Perkins+Will’s Janice Barnes addresses the nuance in mobility types and explains the importance of defining terms upfront.
High-rise Construction | Feb 17, 2015
Work begins on Bjarke Ingels' pixelated tower in Calgary
Construction on Calgary’s newest skyscraper, the 66-story Telus Sky Tower, recently broke ground.
Mixed-Use | Feb 13, 2015
First Look: Sacramento Planning Commission approves mixed-use tower by the new Kings arena
The project, named Downtown Plaza Tower, will have 16 stories and will include a public lobby, retail and office space, 250 hotel rooms, and residences at the top of the tower.
