Effects of COVID-19 Predicted to Decrease U.S. Office Demand
“The virus’ macroeconomic impact is now quite visible in U.S. data,” according to the Q2 2020 NAIOP Office Space Demand Forecast. “Since March 2020, COVID-19 has markedly altered the U.S. macroeconomic landscape as states issued stay-at-home orders designed to limit the spread of the disease. Workers across multiple industries are staying home, and it is unclear how or when they will return their workplaces. Due to the turmoil in the national economy, rising unemployment and continued uncertainty about future work arrangements, the U.S. office market absorption is forecast to decline into negative territory through the second quarter of 2021.”
Through that time, macroeconomic forces will continue to put downward pressure on office vacancy rates. The forecast predicts the deepest negative absorption rates (meaning more space is released to the market than is leased or purchased) of approximately 16% t in the third quarter of 2020, and a gradual easing roughly negative 7% later in 2020 and eventually to a positive 1.6% in the third quarter of 2021.
Read the full Q2 2020 NAIOP Office Space Demand Forecast.