A research note out of Marcus & Millichap on the office market claims there are "bifurcated fundamentals." Central business district (CBD) offices are seeing faster climbing vacancy rates than those in suburbs, so preliminary second quarter data suggests.
What's causing the unhealthy disparity? Concerns about health.
"This is in part due to the increased emphasis on facilities with health-conscious attributes, like air quality and moisture, water quality, and access to natural lighting," the note said. "Tenants are choosing between paying premiums for spaces with health-promoting qualities, or reducing expenses by moving into more cost-effective locales. The result is stabilizing performance for space with post-pandemic upgrades, while older assets without modern features have struggled, especially in urban cores."
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