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 | Feb 3, 2021
NBCU News Group unveils new Washington bureau and studios
The project spans six floors and 80,000 sf.
Office Buildings | Feb 3, 2021
A towering helix will mark the spot at Amazon’s corporate headquarters in Virginia
The tech giant has invested $2.5 billion in a project that will encompass five office buildings for 25,000 employees.
Office Buildings | Feb 1, 2021
609 W. Randolph begins construction in Chicago’s West Loop Gate
Antunovich Associates designed the project.
Office Buildings | Jan 27, 2021
New creative office space completes in Silicon Beach
SPF:architects designed the project.
Office Buildings | Jan 19, 2021
Anchorage to receive new glacier-inspired office building
Perkins&Will is designing the building.
Office Buildings | Jan 12, 2021
Epic Games purchases North Carolina mall to convert into new HQ
The video game company is currently valued at over $17 billion thanks to Fortnite, its massively popular battle royale game.
Architects | Jan 5, 2021
Ware Malcomb finds itself in the mix for multiple diverse projects
Its latest completion is an office/factory/warehouse combo for one of Marvin Window’s brands.
Giants 400 | Dec 16, 2020
Download a PDF of all 2020 Giants 400 Rankings
This 70-page PDF features AEC firm rankings across 51 building sectors, disciplines, and specialty services.