Owen Thomas, CEO of Boston Properties, believes that the concern over the pandemic’s impact on office space demand is “overblown.”
Thomas argues that business leaders are eager to bring their employees back into the office in order to better nurture collaboration and culture.
“Though employees may be working remotely more in the future, it will be difficult for employers to translate lower census into space savings due to employees’ desire for more privacy and a fixed workstation,” said Thomas.
Once vaccines are more widely available, he believes that leasing will start to grow as people feel more comfortable working in a physical office.
While the company’s FFO fell by 15% over the last three quarters compared to pre-pandemic levels, Thomas said the firm’s portfolio is still stable and that they have been able to collect over 99% of rents.
He added that activity actually improved during each quarter as investors slowly stepped back into the market.
“Office was no more out of favor then other asset classes after the pandemic as office transaction volume was 29% of total commercial real estate volume both in 2019 and the last three quarters of 2020,” said Thomas.
However, analysis from Mizuho Securities has indicated that as the pandemic worsens and vaccine rollout remains complicated, the office sector will continue to be impacted for much of this year.