cushman & wakefield releases 2020 global office impact study study predicts office sector recovery to be slow, but full recovery expected despite work-from-home trend
oct 15, 2020
shanghai – october 15, 2020 – cushman & wakefield (nyse: cwk), a leading global real estate services firm, recently released its first-ever global office impact study, projecting that the world’s office leasing fundamentals will be significantly impacted by the covid-19 recession and the work-from-home trend, but they will ultimately begin to improve in 2022 and will fully recover by 2025. the full recovery timeline is consistent with what was observed during the great recession, but at a slight lag due to the work-from-home trend. the report was developed by the firm’s newly organized global think tank, a team of senior researchers and economists from around the world. the study analyzed the cyclical and structural changes impacting the global office market and the implications for recovery.
“we set out to answer the foundational and somewhat ambiguous question of ‘what will become of the office’ by taking a deep, scientific look at the forces created by this pandemic and the cumulative impacts on office sector fundamentals,” said
kevin thorpe, cushman & wakefield's chief economist and global head of research. “we’ve examined the collective impact of these forces, including job losses, office vacancy and rental rates, geographic characteristics, and work from home expansion, to establish future-looking scenarios that, under our base case, ultimately project a full global office market recovery. of course, all real estate is intensely local, and not every local market will follow the same path to recovery.
key findings from the 2020 global office impact study are concentrated on the full economic and employment recovery anticipated for q1, 2022, and the corresponding demand for office space as vacancies begin trending downwards and rental rates begin appreciating. by 2025, global office vacancy is anticipated to return to pre-crisis levels of approximately 11%, with rents returning to pre-crisis peak levels.
“even though the impact of work-from-home trends will slow the office market recovery, the overall growth in office-using job sectors along with many other factors – including agglomeration, culture/branding, and productivity – collectively indicate that the office will continue to play an important role in the economy going forward, said
rebecca rockey, global head of forecasting at cushman & wakefield. “with this study, we’re looking into an uncertain environment through the lens of evidence, data, and science.”
“asia pacific continues to show its resilience relative to other regions but is not immune to the negative impacts of the pandemic. the region entered the crisis with a formidable supply pipeline with a robust wave of office development slated for delivery in 2020-2022. consequently, we had already seen some softening in markets with increasing vacancy and rental decline prior to the pandemic, and our current forecasts reflect an intensification of that trend.” said
dr. dominic brown, head of insight & analysis, asia pacific at cushman & wakefield. “more widely, increased flexible working and work-from-home practices are less prevalent across asia pacific as a whole compared to other regions and so do not meaningfully alter the outlook for the region’s office market. from 2022-2030, we expect net office demand to grow by 729 msf in the region, despite a 4.5% drag due to the impact of work-from-home.”
like asia pacific and supported by various structural factors, such as increasing office-based employment, the level of occupied stock in mainland china is expected to continue rising over the entire forecast horizon despite weaker near-term demand.
shaun brodie, head of occupier research, greater china, cushman & wakefield, said: “of all the regions studied in the report, mainland china’s structural office demand is estimated to be the least impacted by work-from-home between 2022-2030. mainland china’s short and successful lockdown in 2020 q1 allowed for a rapid return to normal office-based working with little time to fundamentally change working habits.”
jonathan wei, managing director, head of occupier services, china at cushman & wakefield, said: “we estimate that in mainland china over ~85% of tenant demand comes from domestic companies. typically, these firms display marked corporate culture differences from their western counterparts, and often there is a prevailing skepticism that full-time work-from-home arrangements will result in positive outcomes or be adopted in the mainstream.”
the 2020 global office impact study is the first of a four-part series, which will provide a new and thoughtful look into the future of the office, and the role it will play in a post-pandemic environment.
read the 2020 global office impact study
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about cushman & wakefield
cushman & wakefield (nyse: cwk) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. cushman & wakefield is among the largest real estate services firms with approximately 53,000 employees in 400 offices and 60 countries. across greater china, 22 offices are servicing the local market. the company won four of the top awards in the euromoney survey 2017, 2018 and 2020 in the categories of overall, agency letting/sales, valuation and research in china. in 2019, the firm had revenue of $ 8.8 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services. to learn more, visit www.cushmanwakefield.com or follow @cushwake on twitter.
for further information, please contact:
mandy qian
director, marketing & communications, greater china
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