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
Building Team Awards | Jun 8, 2017
Raising the bar: Zurich North American Headquarters
Silver Award: Forgoing a typical center-core design, the Zurich North America Headquarters rises 11 stories across three stacked bars.
Office Buildings | Jun 8, 2017
Take a look at the plans for Google’s new 1 million-sf London campus
Heatherwick Studio and BIG are designing the 11-story building.
Building Team Awards | Jun 6, 2017
Nerves of steel: 150 North Riverside
Platinum Award: It took guts for a developer and its Building Team to take on a site others had shunned for most of a century.
Office Buildings | Jun 2, 2017
Strong brew: Heineken HQ spurs innovation through interaction [slideshow]
The open plan concept features a Heineken bar and multiple social zones.
Office Buildings | May 30, 2017
How tech companies are rethinking the high-rise workplace
Eight fresh ideas for the high-rise of the future, from NBBJ Design Partner Jonathan Ward.
| May 24, 2017
Accelerate Live! talk: Applying machine learning to building design, Daniel Davis, WeWork
Daniel Davis offers a glimpse into the world at WeWork, and how his team is rethinking workplace design with the help of machine learning tools.
High-rise Construction | May 23, 2017
Goettsch Partners to design three-building Optics Valley Center complex
The Chicago-based firm won a design competition to design the complex located in Wuhan, China.
Office Buildings | Apr 18, 2017
Heineken USA Headquarters redesign emphasizes employee interaction
An open plan with social hubs maximizes co-working and engagement.
Office Buildings | Apr 17, 2017
Vertical integration triggers growth for an L.A.-based office furniture provider
Customization and technology drive sales for Tangram Interiors.
Market Data | Apr 13, 2017
2016’s top 10 states for commercial development
Three new states creep into the top 10 while first and second place remain unchanged.