The office market won’t reach pre-Covid levels until 2025, a brokerage report has found.
The analysis by Cushman and Wakefield predicts that office vacancies across the world will continue upward, reaching 15.6 percent in 2022, Bloomberg reported. About 95.8 million square feet of space will become vacant in the next two years.
Before the coronavirus, the world’s average office vacancy rate was 10.9 percent, according to the report. After employees spent months working remotely, adjusting their living spaces to work from home, there has been limited enthusiasm for returning to the office, despite appeals from business leaders and New York City landlords to bring employees back.
The brokerage report sees U.S. office rents falling 6.5 percent next year and 2.3 percent in 2022. The vacancy rate will continue to rise, but job gains will resume in 2021.
Despite the grim outlook for the office sector, office workers will still fare better than those in the service industry, it forecasts.
In Europe, rents are predicted to fall 7.8 percent next year and 1.7 percent in 2022, but the vacancy rate is expected to top out at 10.5 percent. Office-job losses in Europe will also not be as pronounced as in the U.S.
Office rents in Greater China, where the pandemic began, will fall 8 percent this year and 5.2 percent in 2021, but will pick up after that. Office vacancy rates will linger at about 25 percent until 2024, when job growth will raise demand for office space, according to the report. [Bloomberg] — Georgia Kromrei