How COVID-19 Is Changing Operations for Class-A Office Owners
KBS CEO Chuck Schreiber discusses how the pandemic is changing tenant needs and what that means for office owners.
August 20, 2020 | Patricia Kirk | National Real Estate Investor
The full brunt of the pandemic’s toll on the office sector was evident at the end of the second quarter of 2020. The quarter ended with negative absorption of 21.5 million sq. ft., which is similar to the 21.2 million sq. ft. of negative absorption in the second quarter of 2009, according to the second quarter office report from real estate services firm CBRE.
Total office leasing dropped by 44 percent year-over-year and vacancy rose to 13 percent nationally. As tenants downsized, the percentage of sublease space increased by 30 basis points from the first quarter to its highest level since 2010, to comprise 2.7 percent of all available office space.
The majority of the quarter’s negative absorption, 72 percent, occurred in California, Texas and the New York metro area, which together include 43 percent of the nation’s office inventory, according to CBRE. The only markets recording positive absorption were in the Southeast, Midwest and Washington, D.C.
