by Brianna Crandall — December 9, 2020 — Listing rates appear to be sticky relative to demand as owners and managers wait out the pandemic instead of lowering rates, according to the latest National Office Report from CommercialEdge powered by Yardi. Although there are reasons to believe that the traditional model of full-time in-office work will not return intact, it is also reasonable to think that companies will want to retain office space for collaborative workplace activities that have diminished during the pandemic, concludes the report.
November National Office Report
The November National Office Report data shows that the national average full-service equivalent listing rate fell 25 cents in month-over-month, to $38.11 while the national vacancy rate decreased 20 basis points from October to 13.4%. That jump has contributed to the glut of sublease space now available. Whether any takers for empty offices are out there, though, remains to be seen, remarks Yardi.
“Employment in sectors classified as office-using could also provide a ray of optimism in a sea of uncertainty,” states the report. “Office-using sectors, down 4.1% year-over-year, have continued to fare better than the labor market as a whole, down 6.1% year-over-year.” In nearly every market, office-using job sectors are performing better than the labor market as a whole.
Properties that were under construction when COVID-19 forced initial lockdowns are delivering, but little stock is being added to replenish the pipeline. Nationally, 54.6 million square feet have been completed in 2020, but the total under construction has decreased 12.4% since the start of the year.
October National Office Report
For comparison, the October National Office Report found office listing rates falling, vacancies increasing and new development slowing. The national average full-service equivalent listing rate fell 25 cents from the previous month, to $38.07 — a 0.5% decrease from the same period last year. The national vacancy rate increased 30 basis points month-over-month to 13.6%.
Meanwhile, the amount of new office stock under construction had fallen steadily throughout the year. Only 24 of the top 75 markets analyzed had more square feet under construction in October than at the start of 2020.
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