Office Market Could Shed 145M Square Feet in the Next Two Years
Demand for office space has decreased 20% more during the pandemic than it did during the Great Financial Crisis.
September 24, 2020 | Kelsi Maree Borland | GlobeSt.com
The office market has been rocked by the pandemic, thanks to both widespread job loss and remote work mandates. Now, a new report from Cushman & Wakefield captures the pandemic’s impact on the office market as well as looks at a potential path to recovery.
In the company’s baseline scenario, which has a 50% probability, the US office market will shed 145 million square feet of office space in the next two years, through the end of 2021. Job loss is the driving force behind the degeneration of the US office market, with the report anticipating a loss of 1.7 million jobs in 2020. This is an improvement compared to the 2.6 million jobs lost in the second quarter.
To put the impact of the pandemic in perspective, C&W has determined that office demand will decrease 30% more during the pandemic than it did during the 2008 Great Financial Crisis. Negative absorption will also outpace prior recessions. In the Great Financial Crisis, absorption totaled -2.1% of total inventory, and in the previous recession, the Dot Com Recession, total office absorption totaled -2.4% of total office inventory at the time. In the current pandemic, Cushman & Wakefield estimates that office absorption will decrease 2.7% of total inventory. These numbers represent the market contraction through the total downturn.
