Office Pricing May Face Long Road to Recovery
More than 18 months after the pandemic transformed millions of office employees into remote workers, the future of the office sector remains one of the hottest topics in commercial real estate.
A wide-range of voices has failed to reach anything approaching consensus on the subject. Some predict the vast majority of companies will depend on some level of remote work well into the future, while others forecast that only a precious few prestigious tech firms and other innovative companies will be able to outlast an eventual mandate to return to the traditional office.
Post Pandemic Office Survey
To gain further insights into the health and expected performance of the post-pandemic office sector post-pandemic, we surveyed appraisers and valuation experts who are at the center of every transaction and consume enormous amounts of comps and public property data on a daily basis.
Seventy-six appraisers – whom combined service every commercial real estate asset type across the U.S. and Canada – were questioned about the health and future recovery of the office market. As recently covered in GlobeSt., their responses reflected the generally murky view of its future – with just over 30 percent deeming the market “unhealthy”, and about half calling its prospects “unclear”. Just under 12 percent of those polled said pricing across the sector was currently healthy in their estimation. The majority of respondents believe that occupier demand for office space could take up to five years to push property values to pre-pandemic levels.
When asked about current rents for office space, roughly 75 percent of respondents said they believe asking rents are too high, given their read on current market rents for office properties. When asked how long it might take for rents to return to pre-pandemic levels, most agreed that it would be a long road ahead: 34 percent said between 2-3 years, and another 27 percent pegged it at 4-5 years. Roughly 30 percent of respondents took a more rosy view, saying rents would bounce back within the next two years.
Appraisers play a critical role in observing market factors for not just the office sector, but all areas of commercial real estate. As the premier software solution for commercial real estate appraisers, Valcre’s users have a wealth of market knowledge and insights that can be extremely valuable and reliable in charting the trajectory of any number of asset types within a given market and on a national scale.
Valcre is the premier appraisal software solution for the commercial real estate industry. The platform offers appraisers a singular tool that simplifies job and client management, allowing them to save countless hours by providing access to prior jobs, historical data and comps. Contact us for more information, to schedule a demo or if you’d like to explore our mobile app.