In a new report, Cushman & Wakefield indicates that office pricing should recover by late 2022.
To get to this conclusion, Cushman & Wakefield presumed US office employment declines by 1.2 million jobs in 2020, Congress passes another fiscal relief bill, the Coronavirus situation begins to resolve by mid-2021 and the historical relationship between job losses and net absorption holds true in this cycle, according to Cushman & Wakefield’s “U.S. Property Markets & The Economy” by David Smith.
While it doesn’t expect a seismic shift to remote work, Cushman & Wakefield does project that the number of people working from home will increase from 5% to 10%.
Overall, Cushman & Wakefield says that 90% of people want to return to the office, and 78% want remote working policies expanded. The office still has some advantages for knowledge spillover, worker productivity, culture and mentoring, training and onboarding.
“Surveys indicate office employees want options and want to be in an office on a regular basis,” Cushman & Wakefield says in the report. “The future is total workplace ecosystems that offer more employee choice.”
The share of agile workers will increase from 40% pre-COVID-19 to 56%, according to the report. Cushman & Wakefield assumes that 90% of agile workers have workstations. Additionally, the decade-long trend of densification will come to a halt as the square-foot per worker ratio remains fixed at 2019 levels.
With a stronger-than-expected bounce back, full recovery could come as soon as Q1 2021. Lower than expected performance could put the recovery at Q4 2023.
Ultimately, Cushman & Wakefield emphasizes that the pandemic is causing the recession and the situation won’t improve substantially until that is brought under control. As the crisis has taken hold, office rents have declined in one-fifth of US markets, and national vacancy is up 49 basis points quarter-over-quarter.
Still, there are some positives. Cushman & Wakefield thinks the recession may already be over and the uneven recovery has started. Even with the tumultuous last six months, collections for office rents have remained above 90%.