As the pandemic winds on, the big question of what will ultimately unfold for the hard-hit office sector is on everyone's minds. But a recent analysis by Moody's Analytics economists say clarity is on the horizon, with 2021 likely functioning as a "transition period" for the troubled asset class in many markets. 

Economists Barbara Byrne Denham and Thomas LaSalvia predict that 2021 "will be a difficult period for the office sector," though they say a "seismic shift in the demand for square footage is unlikely." A lag in CRE market stress is likely, they say, but will be followed by a "slow and steady return to pre-pandemic rents and vacancy rates."

Among large cities, the roster of post-pandemic office standouts include the usual suspects of Austin, Denver, and Raleigh. Phoenix and Raleigh closed out 2020 with year-over-year reductions of a minimum of 60 basis points in office vacancy rates, according to Moody's Analytics Reis data, the economists note in their report. The experts' annualized average effective-rent 2021 forecast for so-called "old guard" office markets like Chicago, New York City, Los Angeles, and San Francisco clocks in at negative 8.3%.