According to CBRE CEO Bob Sulentic, workers are expected to spend 20-25% less time in the office compared to pre-pandemic. During a panel hosted by the Dallas Regional Chamber, Sulentic stated that companies like CBRE are striving for a balance between in-person work and acknowledging employees’ desire to avoid lengthy commutes.
The demand for office space has declined as more companies have implemented remote-work policies, resulting in an 18.4% vacancy rate in the third quarter of this year according to CBRE. Additionally, rising borrowing costs have put pressure on landlords and contributed to a decrease of nearly 21% in office prices over the past year (as reported by Green Street). Some investors, including Brookfield Asset Management, have even defaulted on debt and abandoned buildings.
Sulentic noted that these higher borrowing costs have had a greater impact on commercial real estate valuations than initially anticipated by his firm. While they originally predicted values may drop by 15-20%, they now believe it could be up another 10%. This information was shared during Connect CRE’s recent panel discussion with industry experts.
