Hybrid working is not good for the office market

By: Trademagazin Date: 2024. 06. 27. 10:51

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The effects of the pandemic can still be felt in the American office market years after the global health crisis. According to Moody’s latest report, it is expected that by 2026, nearly a quarter of American office space will be vacant, which may cause a significant decrease in real estate values.

The continued popularity of remote work and the spread of hybrid work models are putting enormous pressure on the office rental market. The vacancy rate, currently at 19.8%, is expected to reach 24% by 2026 in the United States, according to the report. This increase directly affects the revenues of office lessors, which may decrease by up to 8-10 billion dollars in the coming years.

According to Moody’s experts, this increase in the vacancy rate could result in a loss of real estate values of about $250 billion. This decline is particularly sensitive to those white-collar sectors such as the financial sector, information technology and the real estate market, where the proportion of telecommuters is high.

The analysis highlights that as a result of hybrid working, office workers need about 14% less office space than before the pandemic. This trend predicts a further decrease, as employers are increasingly shifting from long-term rental contracts to shorter-term and more flexible solutions, such as co-working agreements.