The U.S. office sector will suffer more in 2021 than it did in 2020, says Moody’s Analytics. The Moody’s subsidiary forecasts the national vacancy rate rising to 19.4% this year, surpassing the previous high of 17.6% from 2010 and then holding steady in 2022.
Although effective rents in this sector fell only 0.7% in 2020, the average effective office rent is projected to decline by 7.5% in 2021 before steadying in 2022, with the Bay Area and New York hit especially hard. “We do not expect average effective office rents to reach their pre-pandemic levels until 2026,” according to Moody’s Analytics.
Offering a glimmer of positive news, Barbara Denham, senior CRE economist at Moody’s Analytics, said, “Though we expect the office sector will suffer more severely in 2021 than it did in 2020, the vaccine rollout brings hope for more in-person business later this year and into 2022.”
Paul Bubny serves as Senior Content Director for Connect Commercial Real Estate, a role to which he brings 13-plus years’ experience covering the commercial real estate industry and 30-plus years in business-to-business journalism.
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