In its original forecast on the impact of the pandemic on the office sector, Capital Economics said that office occupancy would fall by 7% to 8% by 2025, with that, “vacancy would rise markedly and remain elevated” through 2030. And those lower occupancy levels and declining rents would result in a 20% decline in portfolio incomes by 2025, all the while net operating incomes would remain below pre-pandemic levels through the decade.
Now, the research firm suggests that the “35% plunge in office values we’re forecasting by end-2025 is unlikely to be recovered even by 2040,” in a new report published on Thursday. That means that offices are unlikely to regain their peak values in the foreseeable future, or in the next 17 years, per Capital Economics. That’s because of dramatically lower demand following the shift to remote work that emerged from the pandemic.
The report, written by Capital Economics’