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
| Aug 12, 2016
OFFICE GIANTS: Technology is giving office workers the chance to play musical chairs
Technology is redefining how offices function and is particularly salient in the growing trend of "hoteling" and "hot seating" or "free addressing."
| Aug 12, 2016
Top 70 Office Engineering Firms
Jacobs, AECOM, and Thornton Tomasetti top Building Design+Construction’s annual ranking of the nation’s largest office sector engineering and E/A firms, as reported in the 2016 Giants 300 Report.
| Aug 12, 2016
Top 100 Office Construction Firms
Turner Construction Co., Structure Tone, and Gilbane Building Co. top Building Design+Construction’s annual ranking of the nation’s largest office sector construction and construction management firms, as reported in the 2016 Giants 300 Report.
| Aug 12, 2016
Top 100 Office Architecture Firms
Gensler, HOK, and Perkins+Will top Building Design+Construction’s annual ranking of the nation’s largest office sector architecture and A/E firms, as reported in the 2016 Giants 300 Report.
Office Buildings | Jul 29, 2016
The ROI of company culture: Why companies should look at culture’s impact on profit
Organizations that purposefully craft and develop their culture experience a 14% turnover rate, whereas organizations that ignore their culture experience a 48% turnover rate, writes PDR Senior Consultant Christine Mikhail.
Office Buildings | Jul 13, 2016
Latest Gensler survey links innovation with workplace flexibility
A poll of 4,000-plus U.S. workers finds the most innovative among them spend less time at the office.
Office Buildings | Jul 12, 2016
CF Møller designs LEGO world headquarters complex in Denmark
The 52,000-sm complex will incorporate many familiar motifs from the popular plastic building block toys.
Office Buildings | Jul 11, 2016
CetraRuddy designs office tower for Manhattan’s Meatpacking district
Plans originally called for a hotel, but the architect and developers adapted their design for commercial use.
Market Data | Jul 6, 2016
A thriving economy and influx of businesses spur construction in downtown Seattle
Development investment is twice what it was five years ago.
Contractors | Jul 4, 2016
A new report links infrastructure investment to commercial real estate expansion
Competitiveness and economic development are at stake for cities, says Transwestern.