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Office Landlords Hopeful Vaccines Will Jump-Start Sector in 2021

December 30, 2020

Office buildings have been quieter this year as companies moved to a mostly remote workforce, leaving many of the nation’s offices empty. But as the COVID-19 vaccine campaign ramps up, office building landlords are hopeful for a turnaround in 2021.

However, workers’ return to the office could take time. Some estimates by public health officials and real estate executives suggest that, by late spring or early summer of 2021, vaccines will become more widely available to a greater number of people, allowing more people to move more freely.

“Hundreds of billions of dollars of office building value and mortgages depends on the timing and scale of the return and how that affects office leasing and rents,” The Wall Street Journal reports. CBRE Group Inc. estimates office rents could still drop by up to 8% next year as the nation remains in a remote workforce or some form of it.

Public health experts estimate that at least 65% of the population in the U.S. must be immune for the contagion rate to drop below 10 new cases per 100,000 per day. That will be one milestone for workers to return to offices in increasing numbers, they suggest. Health officials hope that about 45% of the U.S. population will have been vaccinated by late spring.

Regardless, the return to the office is expected to be gradual. Employees will typically continue to wear masks and take safety precautions as they return to the workplace. Working from home will continue to be common in some hybrid forms even as the pandemic wears down, experts predict.

“Businesses that are highly competitive for top talent will likely begin opening small satellite offices in metropolitan areas and offering employees the option of working there, at home, or in centralized headquarters—or a combination of the three,” The Wall Street Journal predicts.

Hopeful for a better 2021, some companies are beginning to make return-to-office plans. For example, The Wall Street Journal reports, office building owners are noticing an uptick in tenants that are planning deals in numerous buildings rather than just one for the return of their offices. Some are also in discussions with co-working firms like WeWork and Industrious to help spread out the return of their employees over multiple locations.

COVID-19 Vaccine Outlook Prompts Businesses to Dust Off Return-to-Office Plans,” The Wall Street Journal (Dec. 29, 2020) [Log-in required.]