U.S. Office Market Faces Uncertain Times Ahead, Yardi Matrix Reports

Millions of workers are now working
from home, which could have long range implications for office space; Coworking
also faces a potential rough patch

SANTA BARBARA, Calif.,
March 31, 2020 – February was the last month of the record long economic
recovery before U.S. office workers were largely asked to work from home, which
will likely have long term implications for the national office market, Yardi
Matrix reports in this month’s National Office Report.

The rapid growth of COVID-19
has made it clear the economy has quickly shifted into contraction mode as the
nation reacts to an unprecedented pandemic.

“This is a rapidly changing
situation with no clear timeframe or conclusion, and as of now it’s unclear how
long the shelter-in-place orders, social distancing and moratoriums on public
gatherings will last or how deep the economic contraction may become,” states
the report.

Market experts
also suspect that the mandatory work from home restrictions may have long term
implications for offices, perhaps changing how feasible and desirable workers
view remote work, while potentially having more challenging implications for
the coworking industry.

“Owners
may be hesitant to lease space to coworking firms that are themselves dependent
on short-term leases. Further, remote workers that had utilized cowork­ing
space may find themselves making the home office a permanent one over the next
couple of months,” states
the report.

Office transactions will
likely come to a halt for the time being despite record low interest rates and
widening cap rate spreads. For the most part, the office market didn’t enter
this situation overbuilt or with loans that are overleveraged. This should help
activity resume once the crisis subsides.

Yardi Matrix offers the industry’s
most comprehensive market intelligence tool for investment professionals, equity
investors, lenders and property managers who underwrite and manage investments
in commercial real estate. Yardi Matrix covers multifamily, student housing, industrial,
office and self storage property types. Email [email protected], call (480) 663-1149 or visit yardimatrix.com to learn more.

About Yardi

Yardi^® develops and
supports industry-leading investment and property management software for all
types and sizes of real estate companies. Established in 1984, Yardi is based
in Santa Barbara, Calif., and serves clients worldwide. For more information on
how Yardi is Energized for Tomorrow, visit yardi.com.