“ Office occupancy fell less than a point last week to 49.7%, according to Kastle’s 10-city Back to Work Barometer. Occupancy dipped across seven of the 10 tracked cities — except for Chicago, Dallas, and San Jose, Calif. Chicago continued its post-pandemic climb and rose half a point to 54.7% occupancy, surpassing last week’s record high. Dallas and San Jose also rose nearly half a point to 54.5% and 39.4% occupancy, respectively. The average daily high was Tuesday at 59.2% and the low was Friday at 32.8%.”
That’s from KASTLE Systems, an office access management company. The office occupancy rates across the US have stagnated and don’t seem to be increasing. I don’t see why occupancy rates would go back to pre-Covid levels ever again. The work from home transition is permanent.
Therefore, valuations of office space will eventually have to be marked down and given the leveraged nature of the market, the markdown’s impact on commercial real estate corporate valuations ought to be magnified considerably.
