February 1, 2021

The impact of the yearlong pandemic on the office space market and associated rental rates has been one of multiple realities. Large tech tenants, large professional service firms, and large distribution and industrial tenants have continued to pay rent and maintain their tenancies. Midsize consultancy, boutique service companies, mental health providers, shared workspace providers and internet startups have seen a drastic reduction in footprints and associated rent defaults. Ground-floor retail occupancies have been the most severely impacted. Most office users have migrated to work-from-home or remote operations. Vacancy rates in the sublease market has increased dramatically in most metropolitan markets, signaling that market conditions will remain volatile for at least the first two to three quarters of 2021.

What will be the long-term impact of the pandemic on the future of work in the urban center? What will offices look like? Will companies need more space for social distancing, less space because of remote operations? Will dining and cafeteria facilities, quiet rooms, open work areas/work benches and gym facilities be cut back? Do some service providers (specialty insurance line carriers, traders, mental health providers) even need offices any longer?

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