Return To Pre-Pandemic Office Values Could Be Five Years Away

The majority of appraisers servicing commercial assets nationally say occupier demand for office space could take up to five years to push property values to pre-pandemic levels, according to a recent survey of the industry by Valcre.

In the study, Valcre questioned more than 75 appraisers, all of whom service commercial assets on a national scale, about the health and future recovery of the office market following 18 months of stay-at-home orders and increasingly liberal remote work policies. More than half of respondents say the state of the US office market is currently unclear, with another 30% deeming the market healthy.

Nearly three-quarters of respondents say they believe asking rents are too high when compared to the current market value of office properties.  Research from Newmark currently lists national pricing at $30.29 per square foot.

These findings are among the many data points the industry is using to navigate the uncertain market.

Earlier this week, Cushman & Wakefield CEO Brett White made headlines for telling CNBC he expects a “full recovery” of office employment by the middle of next year.  

“Companies are thinking about space very differently,” he told CNBC. “Companies realize the office needs to be a place that attracts people…and a place that’s rich in technology that helps the tenant experience within the buildings.”

White’s remarks came as many large companies have announced they’ll push back their return to work plans as the Delta variant surges coast to coast.  Since the pandemic began, tenants gave back around 200 million square feet, according to Marcus & Millichap data, and the current office vacancy rate stands at 16.2%, matching the peak of the financial crisis.