The future of the office market remains largely uncertain as occupancy remains low, but high rent collections have kept it stable.
According to Spencer Levy, chairman of Americas research and senior economic advisor for CBRE, the office market has seen a few significant outcomes throughout the pandemic: multi-tenant properties with short-term leases are suffering, while properties with corporate tenants are trading hands.
The dislocation of offices is largely market driven with central business districts and dense cities seeing large dips in occupancy.
“CBD markets will take longer to come back than drive-to markets with low density,” said Levy. “The window of opportunity is longer in big cities than secondary, drive-to markets.”
Levy suggests that office tenants in smaller and secondary markets should negotiate deals before deals in major metro areas.
Additionally, Levy added that he doesn’t believe remote working will be a widely adopted trend and that “most office use is a need not a want.”
However, he also stated that there will likely be a spike in the hub-and-spoke model as companies seek more flexibility and less risk in their office takeup.