{"id":425857,"date":"2022-04-02T23:27:00","date_gmt":"2022-04-02T20:27:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/office-buildings-sit-more-than-half-empty-why-the-next-recession-could-spur-more-trouble\/"},"modified":"2022-04-02T23:27:00","modified_gmt":"2022-04-02T20:27:00","slug":"office-buildings-sit-more-than-half-empty-why-the-next-recession-could-spur-more-trouble","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/office-buildings-sit-more-than-half-empty-why-the-next-recession-could-spur-more-trouble\/","title":{"rendered":"#: Office buildings sit more than half empty. Why the next recession could spur more trouble"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a40b116bc04d\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a40b116bc04d\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/office-buildings-sit-more-than-half-empty-why-the-next-recession-could-spur-more-trouble\/#%E2%80%9C_Office_buildings_sit_more_than_half_empty_Why_the_next_recession_could_spur_more_trouble%E2%80%9D\" >&#8220;: Office buildings sit more than half empty. Why the next recession could spur more trouble&#8221;<\/a><ul class='ez-toc-list-level-2' ><li class='ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/office-buildings-sit-more-than-half-empty-why-the-next-recession-could-spur-more-trouble\/#Global_office_demand_could_drop_14_from_peak_according_to_a_Barclays_WFH_survey\" >Global office demand could drop 14% from peak, according to a Barclay\u2019s WFH survey<\/a><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/office-buildings-sit-more-than-half-empty-why-the-next-recession-could-spur-more-trouble\/#Gauging_future_needs\" >Gauging future needs<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-6'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/office-buildings-sit-more-than-half-empty-why-the-next-recession-could-spur-more-trouble\/#A_look_at_past_recessions\" >A look at past recessions<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/buradabiliyorum.com\/en\/office-buildings-sit-more-than-half-empty-why-the-next-recession-could-spur-more-trouble\/#Office_rents_and_hotel_revenue_per_room_sank_in_past_recessions\" >Office rents and hotel revenue per room sank in past recessions<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/buradabiliyorum.com\/en\/office-buildings-sit-more-than-half-empty-why-the-next-recession-could-spur-more-trouble\/#Joy_Wiltermuth\" >Joy Wiltermuth<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h1><span class=\"ez-toc-section\" id=\"%E2%80%9C_Office_buildings_sit_more_than_half_empty_Why_the_next_recession_could_spur_more_trouble%E2%80%9D\"><\/span>&#8220;: Office buildings sit more than half empty. Why the next recession could spur more trouble&#8221;<span class=\"ez-toc-section-end\"><\/span><\/h1>\n<h2 class=\"article__subhead\" itemprop=\"alternativeHeadline\"><span class=\"ez-toc-section\" id=\"Global_office_demand_could_drop_14_from_peak_according_to_a_Barclays_WFH_survey\"><\/span>\n  Global office demand could drop 14% from peak, according to a Barclay\u2019s WFH survey<br \/>\n<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><\/p>\n<div class=\"column column--full article__content\">\n<div class=\"article__side\">\n<div class=\"container--sticky not-active\">\n<div id=\"cx-next\" data-nosnippet>\n              <\/div>\n<\/p><\/div>\n<\/p><\/div>\n<div id=\"js-article__body\" class=\"article__body article-wrap at16-col16 barrons-article-wrap\" itemprop=\"articleBody\" data-sbid=\"WP-MKTW-0000738976\" role=\"document\">\n<div class=\"barrons-article-ad-wrapper\">\n<div data-track=\"barrons-article-ad-wrap\" class=\"barrons-article-ad sticky_item\">\n<div class=\"barrons-main-article-ad-target sticky_target body_ad\" aria-hidden=\"true\"><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<div data-layout=\"\n                inline\" data-layout-mobile=\"\" class=\"\n          media-object\n          type-InsetArticleReader\n              \n              inline\n  article__inset\n          article__inset--type-InsetArticleReader\n              article__inset--inline\n  \"><\/p>\n<div class=\"media-object-article-reader\">\n<div class=\"audioplayer\" data-sbid=\"WP-MKTW-0000738976\" role=\"region\" aria-label=\"Listen to Article\" tabindex=\"-1\" id=\"articlereader\" data-show-title=\"false\" data-theme=\"wsj-article-reader\" data-show-header=\"false\" data-show-subscribe=\"false\" data-ads-enabled=\"true\" data-save-publication=\"false\">\n        <\/div>\n<\/p><\/div>\n<\/p><\/div>\n<p>       The day of reckoning for office buildings might be around the corner yet, even as commercial property prices press <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.greenstreet.com\/insights\/CPPI\" class=\"icon none\">higher into record territory<\/a>.<\/p>\n<p> This roughly<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.reit.com\/data-research\/research\/nareit-research\/estimating-size-commercial-real-estate-market-us-2021#:~:text=The%20estimated%20total%20dollar%20value,trillion%20as%20of%202021%3AQ2.&amp;text=This%20research%20note%20summarizes%20a,trillion%20as%20of%202021%3AQ2.\" class=\"icon none\"> $3.2 trillion slice <\/a>of the U.S. commercial property market has held up during the pandemic, despite deep rooted changes taking hold since COVID first upended the workplace.<\/p>\n<div class=\"paywall\">\n       The problem is most markets have been reflecting a picture frozen in time, like a cup of coffee abandoned by a worker rushing home to work remote. The outside might look the same, but not on the inside.<\/p>\n<p>\u201cWe haven\u2019t seen a big return to the office, although we are starting to see things improve week-to-week, month-to-month with warmer temperatures,\u201d said Ray Wong, a researcher at the Altus Group, a commercial real-estate data services firm.<\/p>\n<p>\u201cCompanies are still trying to figure out how much office space they need,\u201d Wong said by phone.<\/p>\n<h6><span class=\"ez-toc-section\" id=\"Gauging_future_needs\"><\/span>Gauging future needs<span class=\"ez-toc-section-end\"><\/span><\/h6>\n<p>Getting to the new \u201cnormal\u201d as more companies tee up big decisions about their future office needs now also includes navigating <a rel=\"nofollow noopener\" target=\"_blank\" href=\"http:\/\/A%20key%20part%20of%20the%20Treasury%20yield%20curve%20has%20finally%20inverted,%20setting%20off%20recession%20warning%20%E2%80%94%20here%E2%80%99s%20what%20investors%20need%20to%20know\" class=\"icon none\">market signals that warn<\/a> the next recession could be on the horizon.<\/p>\n<p>\u201cWe expect 20-25% structural decline in office demand,\u201d Ed Reardon\u2019s research team at Deutsche Bank said Tuesday, in a weekly client note. <\/p>\n<p>For one thing, office buildings were only 40% occupied on average as of March 23, according to <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.kastle.com\/safety-wellness\/getting-america-back-to-work\/?utm_campaign=Occupancy%20Request&amp;utm_medium=email&amp;_hsmi=208340008&amp;_hsenc=p2ANqtz-8Q9kge00XEqqhN4FwIrQB-zbaaf-JB6TJNnP2FtdO9zJld2bCqwP3YKgNDSTf-iAVoAYg4hpGRzOi5pDTf9SqiBtk_7foBJH36d8INBX7VettLXz8&amp;utm_content=208340008&amp;utm_source=hs_email\" class=\"icon none\">Kastle System\u2019s latest gauge <\/a>of keycard swipes for nearly 3,000 buildings in 10 major cities.<\/p>\n<p>The weekly gauge helps provide a snapshot of office use since the pandemic gave rise to work-from-home, including showing occupancy rates that have improved from a low of 23.3% on average since the start of this year, but it doesn\u2019t show leasing trends or predict what h<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>ens next as companies navigate employee demands for flexible work. <\/p>\n<p>While office loan delinquencies remain low currently, there have been hints the situation could easily get worse. A recent survey by Barclays of senior decisionmakers found that global office demand could drop 14% from peak levels as more companies make hybrid work permanent.   <\/p>\n<div id=\"cx-membership-tile\"><\/div>\n<p>And in the office megamarket of New York City, with its avenues of older office buildings, Reardon\u2019s team expects office occupancy rates to struggle to top 60% by the end of 2023.<\/p>\n<p>\u201cWe are starting to see lease activity pick up,\u201d Wong said, speaking of the U.S. and Canadian markets. \u201cBut now, what we\u2019ve also been seeing is some people giving space back.\u201d<\/p>\n<h6><span class=\"ez-toc-section\" id=\"A_look_at_past_recessions\"><\/span>A look at past recessions<span class=\"ez-toc-section-end\"><\/span><\/h6>\n<p>Uncertainty about the office sector comes as the Federal Reserve and other central banks plan to raise key interest rates this year to tighten financial conditions in an attempt to cool high inflation, while also seeking to avoid a \u201chard landing\u201d that can hurt jobs and the economy.<\/p>\n<p>\u201cYield curves are flashing recession risk in 2024\/2025,\u201d Reardon\u2019s team wrote, adding that office rents dropped 19% after the late 1990s internet bubble popped (see chart) and 12% in the wake of the 2008 global financial recession.<\/p>\n<div data-layout=\"inline\n                \" data-layout-mobile=\"\" class=\"\n          media-object\n          type-InsetMediaIllustration\n            inline\n  article__inset\n          article__inset--type-InsetMediaIllustration\n            article__inset--inline\n  \"><\/p>\n<figure class=\"\n        media-object-image\n        enlarge-image\n        img-inline\n        article__inset__image\n      \" itemscope itemtype=\"http:\/\/schema.org\/ImageObject\"><\/p>\n<div style=\"padding-bottom:59%;\" data-subtype=\"photo\" class=\"image-container  responsive-media article__inset__image__image\">\n        <img decoding=\"async\" srcset=\"https:\/\/images.mktw.net\/im-515050?width=540&amp;size=1.695364238410596 540w, https:\/\/images.mktw.net\/im-515050?width=620&amp;size=1.695364238410596 620w, https:\/\/images.mktw.net\/im-515050?width=639&amp;size=1.695364238410596 639w, https:\/\/images.mktw.net\/im-515050?width=700&amp;size=1.695364238410596 700w, https:\/\/images.mktw.net\/im-515050?width=700&amp;size=1.695364238410596&amp;pixel_ratio=1.5 1050w, https:\/\/images.mktw.net\/im-515050?width=700&amp;size=1.695364238410596&amp;pixel_ratio=2 1400w, https:\/\/images.mktw.net\/im-515050?width=700&amp;size=1.695364238410596&amp;pixel_ratio=3 2100w\" sizes=\"(max-width: 639px) 100vw, (max-width: 979px) 620px, (max-width: 1299px) 540px, 700px\" src=\"https:\/\/images.mktw.net\/im-515050?width=700&amp;height=413\" alt=\"\" title=\"\">\n      <\/div><figcaption class=\"wsj-article-caption article__inset__image__caption\" itemprop=\"caption\">\n<h4 class=\"wsj-article-caption-content\"><span class=\"ez-toc-section\" id=\"Office_rents_and_hotel_revenue_per_room_sank_in_past_recessions\"><\/span>Office rents and hotel revenue per room sank in past recessions<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p>      <span class=\"wsj-article-credit article__inset__image__caption__credit\" itemprop=\"creator\"><br \/>\n            Deutsche Bank Research, STR, REIS<br \/>\n          <\/span><br \/>\n  <\/figcaption><\/figure>\n<\/p><\/div>\n<p>       Their chart also compares revenue at hotels, which were hit harder than offices in prior recessions.<\/p>\n<p>In the next recession, a large percentage of \u201cCOVID-cured\u201d office loans would be highly vulnerable to becoming delinquent again, according to the Deutsche team, which warned it will coincide with companies giving up even more office space than in than past downturns \u201cas they accommodate WFH.\u201d<\/p>\n<p><strong>See<\/strong>: The bond market\u2019s recession warning isn\u2019t fazing stocks \u2014 yet. Here\u2019s why.<\/p>\n<p>Like in the red-hot residential sector, prices for commercial properties have shot up during the pandemic, increasing 21% in March from a year before, according to the <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.greenstreet.com\/insights\/CPPI\" class=\"icon none\">Green Street Commercial Property Price Index<\/a>. Office prices contributed only slightly to the gains, edging 6% higher in the past 12 months through March, according to the index. <\/p>\n<p>\u201cOn the investment side, you are definitely seeing more activity industrial and in apartments,\u201d Wong said. \u201cIt is the office market that has really slowed down in activity.\u201d<\/p>\n<p>Borrowing rates also have been increase for property owners from the lows of recent years, with the 10-year Treasury<br \/>\n        TMUBMUSD10Y,<br \/>\n        <bg-quote field=\"percentchange\" format=\"0,000.000%\" channel=\"\" class=\"\">2.385%<\/bg-quote><br \/>\n       rate near 2.4% on Wednesday.<\/p>\n<p> Still, Wong thinks there\u2019s more waiting ahead for the office sector, perhaps another nine to 18 months, before a fuller picture emerges of the future of the office, based on if people will flock back into the office or not.<\/p>\n<p><strong>See also:<\/strong> Is this it? More than half of workers still are not returning to office<\/p><\/div>\n<\/div><\/div>\n<p><\/p>\n<div class=\"byline article__byline\">\n<p>    <span>By<\/span><\/p>\n<div class=\"author mobile-scrim hasMenu\" data-scrim='{\"type\":\"author\",\"header\":\"Joy Wiltermuth\",\"subhead\":\"The Wall Street Journal\",\"list\":[{\"type\":\"link\",\"icon\":\"bio\",\"url\":\"https:\/\/www.marketwatch.com\/author\/joy-wiltermuth\",\"text\":\"Biography\"},{\"type\":\"link\",\"icon\":\"twitter\",\"url\":\"https:\/\/twitter.com\/JoyWiltermuth\",\"text\":\"@JoyWiltermuth\"},{\"type\":\"link\",\"icon\":\"email\",\"url\":\"http:\/\/www.marketwatch.com\/news\/mailto:joy.wiltermuth@marketwatch.com\",\"text\":\"joy.wiltermuth@marketwatch.com\"}]}' itemscope itemprop=\"author\" itemtype=\"http:\/\/schema.org\/Person\">\n<h4 itemprop=\"name\"><span class=\"ez-toc-section\" id=\"Joy_Wiltermuth\"><\/span>Joy Wiltermuth<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p><ufc-follow-author-widget product=\"marketwatch\" author-id=\"104_MW\" author-name=\"Joy Wiltermuth\" signin-url=\"https:\/\/accounts.marketwatch.com\/login?target=https%3A%2F%2Fwww.marketwatch.com%2Fstory%2Foffice-buildings-sit-more-than-half-empty-why-the-next-recession-could-spur-more-trouble-11648667391%3Frss%3D1%26siteid%3Drss\" panda-api=\"https:\/\/follow-api.marketwatch.com\"><\/ufc-follow-author-widget><\/p><\/div>\n<\/div>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/news\/\" target=\"_blank\" rel=\"noopener\">News category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"http:\/\/www.marketwatch.com\/news\/story.asp?guid=%7B20C05575-04D4-B545-7B46-A09AC9548D7B%7D&#038;siteid=rss&#038;rss=1\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;: Office buildings sit more than half empty. Why the next recession could spur more trouble&#8221; Global office demand could drop 14% from peak, according to a Barclay\u2019s WFH survey The day of reckoning for office buildings might be around the corner yet, even as commercial property prices press higher into record territory. This roughly&#8230;<\/p>\n","protected":false},"author":1,"featured_media":425858,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.mktw.net\/im-515220\/social","fifu_image_alt":"","footnotes":""},"categories":[70897],"tags":[],"class_list":["post-425857","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/425857","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=425857"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/425857\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/425858"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=425857"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=425857"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=425857"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}