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 | Jun 1, 2015
SHoP Architects unveils dual-glass-box scheme for Uber HQ
The plan involves two glass buildings connected with criss-crossing bridges.
Office Buildings | Jun 1, 2015
Can you make a new building as cool as a warehouse?
Just as we looked at that boarded up warehouse and thought it could be something other, office towers can be reborn, writes CannonDesign's Robert Benson.
Multifamily Housing | May 28, 2015
Census Bureau: 10 U.S. cities now have one million people or more
California and Texas each have three of the one-million-plus cities.
Retail Centers | May 18, 2015
ULI forecast sees clear skies for real estate over next three years
With asset availability declining in several sectors, rents and transactions should rise.
Office Buildings | May 18, 2015
New ASHRAE standard offers test method to determine heat gain of office equipment
The standard will aid engineers in configuring cooling systems in office buildings.
Office Buildings | May 17, 2015
Mountain View, Calif., denies development rights for Google campus master plan
Despite Google’s offer of new bike paths, wetlands restoration, and other perks, the city of Mountain View, Calif., denied the company the development rights to construct a grand new headquarters.
Sponsored | Coatings | May 14, 2015
Prismatic coatings accent the new Altara Center
This multi-use campus will contain a university, sports facilities, medical center, and world-class shopping
Industrial Facilities | May 11, 2015
SOM-designed Manufacturing and Design Innovation Institute opens in Chicago
The new space will be a place for academia, industries, and civic bodies to collaborate.
Mixed-Use | May 10, 2015
Construction on Orlando’s massive ‘innovation hub’ is finally starting
The $1 billion Creative Village development will create a business and education hub.
High-rise Construction | May 6, 2015
Two new designs submitted for New York City Riverside Center
Both designs reference the cantilevers and other elements featured in architect Christian de Portzamparc’s original masterplan for the complex, which has now been scrapped.