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
Airports | Apr 4, 2022
Dominican Republic airport expansion will add mixed-use features
The recently revealed design concept for the expansion of Santiago International Airport in the Dominican Republic includes a transformation of the current building into a mixed-use space that features an office park, business center, and hotel.
Codes and Standards | Mar 23, 2022
High office vacancies have cities rethinking downtown zoning
As record-high office vacancies persist in U.S. urban areas, cities are rethinking zoning policy.
Projects | Mar 22, 2022
Fast-growing Austin adds a $3 billion community
The nation’s fastest-growing large metro area is getting even bigger, with the addition of a $3 billion, 66-acre community.
Projects | Mar 18, 2022
Former department store transformed into 1 million sf mixed-use complex
Sibley Square, a giant mixed-use complex project that transformed a nearly derelict former department store was recently completed in Rochester, N.Y.
Projects | Mar 17, 2022
Plans unveiled for ‘Wall Street South’ mixed-use office block in West Palm Beach
Brand Atlantic Real Estate Partners, Wheelock Street Capital, and B+H Architects released design plans for a new mixed-use office block in West Palm Beach called Banyan & Olive.
Projects | Mar 10, 2022
Optometrist office takes new approach to ‘doc-in-a-box’ design
In recent decades, franchises have taken over the optometry services and optical sales market. This trend has spawned a commodity-type approach to design of office and retail sales space.
Mass Timber | Mar 8, 2022
Heavy timber office and boutique residential building breaks ground in Austin
T3 Eastside, a heavy timber office and boutique residential building, recently broke ground in Austin, Texas.
Performing Arts Centers | Mar 8, 2022
Cincinnati Ballet’s new center embodies the idea that dance is for everyone
Cincinnati Ballet had become a victim of its own success, according to company president and CEO Scott Altman. “We were bursting at the seams in our old building. We had simply outgrown the facility,” Altman told the Cincinnati Enquirer.
Projects | Mar 7, 2022
An Atlanta office promotes employee well-being
For its new Atlanta office, New Relic, a California-based technology company that develops cloud-based software, wanted to keep employee health and wellness at the fore. It also wanted the workspace design to bolster productivity as well as employee engagement and retention.
Projects | Mar 3, 2022
Move, lift, restore: Repurposing a former post office near San Francisco
In mid-February, a construction crew began lifting a 1940s post office building located in Burlingame, Calif., on the San Francisco Peninsula.