Wondering when the office market might rebound from the impact of COVID-19? A new report from the NAIOP Research Foundation points to the third quarter of 2021.
The 2020 NAIOP Office Space Demand Forecast predicts that the country will begin to see positive absorption of office space beginning at that time.
But before then? Officials with the association say that the U.S. office market will experience plenty of challenges.
As the report says, workers across multiple industries are staying home today, and it is unclear when they will return to their workplaces. NAIOP points to turmoil in the national economy, rising unemployment and continued uncertainty about future work arrangements as the main reasons why U.S. office absorption is expected to fall into negative territory throughout the second quarter of 2021.
The forecast predicts the deepest negative absorption rates of about 16 percent in the third quarter of 2020 and gradual easing to a negative absorption rate of about 7 percent later in this year. The assocaition is predicting a positive office absorption rate of 1.6 percent in the third quarter of 2021.
Tim Savage, one of the authors of NAIOP’s report, said that the office market will undoubtedly see big changes in the coming months.
“Employees will arguably put a premium on workplace cleanliness. They will also put a premium on personal space, which may contribute to increased demand for office space,” Savage said. “Many large organizations have begun to consider a ‘hub-and-spoke’ model for work arrangements, enhanced by technology that allows for the economic gains from agglomeration while recognizing the challenges created by the pandemic.”
