Office Sublease Space Beginning to Flood San Francisco
Jeffrey Weil, MCR.h, SIOR, CCIM
Executive Vice President at Colliers
According to a recent Savills Research report, over the past several months since the shelter-in-place shutdown of office buildings there has been a 300% increase in office sublease availability, with over 3.7 million square feet of space currently available. “It is likely that sublease space will increase further - placing downward pressure on overall asking rents.” My opinion: many companies are reevaluating their long-term occupancy strategies for housing their employees realizing that until there is a vaccine social distancing and less office density will be a must, and there is also the scary but real thought out there that this may not be the last pandemic we see in our lifetime and this must be taken into account when planning office space long-term.
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4 年Well said, Jeff. When you also consider that COVID-19 is a close genetic cousin to SARS, it's only logical that, unfortunately, this pandemic will not be last. It is impossible to know what this pandemic will do to values and cap rates, but as a former appraiser, I would already be applying future negative adjustments to valuations -- and adjusting occupancy rates. In turn, this will have a sharp impact on cap rates which can only rise over the next few years. Tomorrow's unemployment report will also be very telling. The market was already poised for an adjustment, but this pandemic accelerated its schedule ten-fold.