According to real estate investment trust representative Nareit, shares of office REITs have fallen an average of 35% of their value this year, but demand is still on the rise.
Despite companies making the swift transition to remote working earlier this year, many are still signing office leases.
While major tech firms like Microsoft and Facebook announced that they would allow employees to work from home permanently, Brookfield Property CEO Brian Kingston said that they are still taking up long-term office leases.
“Even companies that have publicly promoted a more flexible work-from-home policy in the future have not scaled back on their long-term office requirements, opting instead to take advantage of the current disruption to secure even more space for their businesses,” said Kingston. “A number of large tech and financial services tenants have recently reconfirmed their commitment to either maintain or grow their collective presence in New York City and other major commercial hubs, which comprise the majority of our portfolio.”
The continuation of lease agreements from these large companies is due in part to their hybrid arrangement they plan on adopting, where employees can work either from home or in-person for hands-on meetings and other events that require physical attendance.
When workers do come into the office, it will likely be within a flexible or coworking space that is outside of the company’s headquarters.
Kingston added that leasing activity was healthy in the third quarter of this year despite a slight slowdown due to the ongoing pandemic, notably in Asia markets where the virus is more controlled.