The troubled office space market is showing signs of life as firms seek flexible short-term spaces for their employees’ return to work.
In desirable districts, the space glut is over. Many companies see their business, and need for working quarters, expanding in the near future.
As workers settle into hybrid work routines, some employers are upgrading to nicer spaces with a smaller footprint.
Some types of CRE are hurting more than others. A steep downturn could cause pain to regional banks as well as property owners.
A report from Moody’s Analytics finds there’s trouble ahead, but it’s more nuanced than a banking collapse due to empty offices.
Amid high interest rates and vacancy rates, lenders and regulators are concerned about the fallout when borrowers renew their loans.
Vertical farms “can take the spaces that are hard to rent,” explains real estate developer Brian Friedman.
More than 3% of such loans are now delinquent.
Converting offices into apartments comes with challenges.
In New York City, daily office vacancy rates average about 50%. So it and other cities are trying to attract more visitors by converting office space to housing, improving public transit, and making their streets a destination.
