San Francisco, New York Worst-Performing Office Markets
USA – A provider of commercial property data & analytics expects that San Francisco and New York would be the weakest performing office market in the country for 2021, reported Bloomberg on Friday evening (22 January).
Green Street Advisors forecasted that San Francisco could suffer the highest drop in office rents and occupancy levels of 22 percent in 2021 as tech firms institutionalize working from home.
This is followed by the projected 17 percent contraction for both rents and occupancy in New York, where office skyscrapers have been mostly vacant as financial institutions let their staff telecommute amidst the COVID-19 pandemic.
“San Francisco and New York will likely see a permanent resetting of rents as people and businesses look more toward the middle of the country for expansion,” said Green Street’s Analyst Danny Ismail.
“It’s unlikely that rents and occupancy will return to a level pre-COVID over the next few years.”
San Francisco and New York, which has long been favoured by tech and finance firms, have been severely affected by the health crisis. As office occupants attempt to slash costs, they’re reviewing their office space usage and are looking to establish offices in more affordable states.
Cities benefiting from this trend include Georgia’s Atlanta, Austin in Texas, North Carolina’s Charlotte, and Nashville in Tennessee. Green Street expects each of these cities to see a slight increase in office rent and occupancy this year.
However, total demand for office space across the United States is forecasted to drop by about 15 percent to 2025 due to the prevalence of working from home, Green Street added.