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
Cladding and Facade Systems | Oct 26, 2021
14 projects recognized by DOE for high-performance building envelope design
The inaugural class of DOE’s Better Buildings Building Envelope Campaign includes a medical office building that uses hybrid vacuum-insulated glass and a net-zero concrete-and-timber community center.
Office Buildings | Oct 21, 2021
Swinerton opens new regional headquarters in Charlotte
Redline Design Group designed the adaptive reuse project.
Office Buildings | Oct 18, 2021
Henning Larsen designs new headquarters building for KAB
The project is located in Copenhagen.
Glass and Glazing | Sep 30, 2021
Plans move forward on Central Place Sydney, duel towers with an AI-driven façade system
SOM and Fender Katsalidis are designing the project.
Office Buildings | Sep 29, 2021
Walmart’s new Home Office is the largest mass timber campus project in the U.S.
The project will occupy approximately 350 acres.
Mixed-Use | Sep 28, 2021
BIG designs new Farfetch HQ on the slopes of Leça River in Porto
The project is situated within the larger Fuse Valley site.
Office Buildings | Sep 26, 2021
Not your father’s office: Workplaces showcase their panache
Three recent projects take very different design routes.
Market Data | Sep 1, 2021
Bradley Corp. survey finds office workers taking coronavirus precautions
Due to the rise in new strains of the virus, 70% of office workers have implemented a more rigorous handwashing regimen versus 59% of the general population.
Laboratories | Aug 31, 2021
Pandemic puts science and technology facilities at center stage
Expanding demand for labs and life science space is spurring new construction and improvements in existing buildings.
Giants 400 | Aug 30, 2021
2021 Giants 400 Report: Ranking the largest architecture, engineering, and construction firms in the U.S.
The 2021 Giants 400 Report includes more than 130 rankings across 25 building sectors and specialty categories.
