By Ashley Fahey | The Business Journals
A recent analysis by CoStar Group Inc. (Nasdaq: CSGP) found 55% of office leases signed before the pandemic that were active in January 2020 have yet to expire, meaning there’s still a lot of potential vacancy or space reductions that could hit the market.
“All of the pain we’ve been seeing in the office market, we’re realistically only halfway through and are still seeing that aftershock,” said Joseph Biasi, head of capital markets research at CoStar Risk Analytics.
Although some companies inked short-term renewals on their leases at the height of the pandemic, uncertain about what the future would bring, renewal volume today is about half of what it was between 2016 and 2019, CoStar found. The firm also found new leasing activity has decreased 12.5% since the pandemic.
Other groups that track office-space demand are also finding weaker space demand, with VTS Inc.’s Office Demand Index, or VODI, finding office space demand in major U.S. markets in the second quarter at 53% of its average level in 2018-19.
All of this adds up to mounting concern in the office world, especially as trillions in loans backing commercial real estate properties — including beleaguered office buildings — will come due in the coming quarters and years.
