COVID-19 has disrupted nearly every aspect of life in the U.S., but it has yet to show up universally across the commercial office industry
SANTA BARBARA, Calif., June 25, 2020 – Office-using employment has fallen substantially, the planned new-supply pipeline has started to shrink and transaction volume has slowed, according to Yardi Matrix® May commercial office data. However, listing rates have not displayed any significant decreases and completions look much as they did at this point in 2019. In short, it’s still hard to tell what long term consequences the commercial office market may suffer as a result of COVID-19.
Average full-service equivalent listing rates fell 0.7% year-over-year to $38.15 per square foot in May, with the pandemic having no major impact to date on office listing rates according to the latest Yardi Matrix office report. $38.15 per square foot is up 26 cents from April but down 0.7% from May of 2019.
As of yet, Yardi Matrix has not seen a pullback on office space under construction. However, planned projects have begun to soften. “We expect the number of planned projects to continue to decline for the foreseeable future as developers wait to see what the long-term impacts of the pandemic will be on the demand for office space,” states the report.
May’s employment report included a slight bump from the historic 2.7 million job losses witnessed in April and employment in office-using sectors followed the trend. Only one market in the entire country, Austin, saw positive job growth for office-using employment in April.
Yardi Matrix has logged just $4.4 billion of transactions in the second quarter as sales have slowed to a trickle. By contrast, $21.5 billion in sales occurred in the first quarter of 2020.
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