Central business districts are hurting and it will be several months, if not years, before we see if wide vaccine distribution helps these areas rebound.
In New York City, leasing fell to its lowest this century with only one in ten office workers making their way back into Manhattan after lockdowns.
According to a January Fortune survey in collaboration with Deloitte, 75% of CEOs have stated they’ll need less office space moving forward. In a similar survey from back in September, that number was at 76%.
At the same time, only 4% of CEOs from the most recent survey said they’ll need more office space.
This indicates that many CEOs are preparing for remote working to outlast the pandemic, which could be bad for the commercial real estate industry that is desperately trying to bounce back.
“Thousands of small businesses have already or will go under,” said Neel Kashkari, president of the Federal Reserve Bank of Minneapolis. “That rolls up into the commercial real estate market and rolls up into the banking sector,”
In anticipation of these losses, CoStar is predicting that distressed sales could top $650 billion by 2025.