CRE Magic Minute – Episode #2
We are still feeling the impact of the recession although it began in March of 2020, triggered by COVID-19. After economic activity had collapsed at a record pace in Q2, it rebounded almost as sharply in Q3. By the fourth quarter, the pace of recovery had slowed some and performance was still not at pre-recession levels. As 2020 unfolded, we saw a sharp increase in the amount of sublease space available in the office market. Compared to the end of 2019, with 62.6 MSF of sublease space on the market, the volume of such space had nearly doubled to 111.9 MSF only one year later—the largest amount of sublease space available since Q3 2003. Asking rents are likely to decline in the next few quarters as owners face pressure from a rising volume of flex space. It is anticipated that it will be a couple of years before national rental rates begin to appreciate again in the aggregate.
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