by Brianna Crandall — October 7, 2020 — Global real estate services firm Cushman & Wakefield recently released its first-ever Global Office Impact Study, projecting that the world’s office leasing fundamentals will be significantly impacted by the COVID-19 recession and the work-from-home trend, but that they will ultimately begin to improve in 2022 and will fully recover two to three years later.
The full recovery timeline is consistent with what was observed during the Great Recession, points out the study, but at a slight lag due to the remote-work trend. The report was developed by the firm’s newly organized Global Think Tank, a team of senior researchers and economists from around the world. The study analyzed the cyclical and structural changes impacting the global office market and the implications for recovery.
Kevin Thorpe, Cushman & Wakefield’s chief economist and global head of research, explained:
We set out to answer the foundational and somewhat ambiguous question of “what will become of the office” by taking a deep, scientific look at the forces created by this pandemic and the cumulative impacts on office sector fundamentals. We’ve examined the collective impact of these forces, including job losses, office vacancy and rental rates, geographic characteristics, and work-from-home expansion, to establish future-looking scenarios that, under our base case, ultimately project a full global office market recovery. Of course, all real estate is intensely local, and not every local market will follow the same path to recovery.
Key findings from the 2020 Global Office Impact Study are concentrated on the full economic and employment recovery anticipated for the first quarter (Q1) of 2022, and the corresponding demand for office space as vacancies begin trending downwards and rental rates begin appreciating. By 2025, global office vacancy is anticipated to return to pre-crisis levels of approximately 11%, with rents returning to pre-crisis peak levels as well.
The report also finds that social distancing due to COVID-19 may potentially reverse the decades-long trend of densification, in which businesses have been reducing space per office-using employee.
Rebecca Rockey, global head of forecasting at Cushman & Wakefield, added:
Even though the impact of work-from-home trends will slow the office market recovery, the overall growth in office-using job sectors along with many other factors — including agglomeration, culture/branding, and productivity — collectively indicate that the office will continue to play an important role in the economy going forward. With this study, we’re looking into an uncertain environment through the lens of evidence, data, and science.
The 2020 Global Office Impact Study is the first of a four-part series designed to provide a new and thoughtful look into the future of the office and the role it will play in a post-pandemic environment.
The 2020 Global Office Impact Study is available to download from the Cushman & Wakefield website. The firm has some 53,000 employees in 400 offices and 60 countries who deliver value for real estate occupiers and owners across core services of property, facilities and project management, leasing, capital markets, valuation and other services.