National Survey of SIOR Office Brokers: Don’t Expect a Return to Normal Anytime Soon

The Society of Industrial and Office Brokers (SIOR), the elite national organization of the top office and industrial brokers in the country, just surveyed their membership. One SIOR commented he has seen rent discounts of between 10 and 13 percent due to the COVID-19 pandemic, and that during the last three down cycles rents ended up dropping by nearly 20 percent. A New York broker said the Manhattan office market may not begin to recover from the COVID-19 lockdown until 2022, and expects that office tenants will rotate employees between working from home and the office, so that only 30 percent of office space will be occupied at any one time. “This is likely to continue through the end of this year and the next, unless a vaccine becomes available.”  A lot of sublease space is expected to hit the market and urban offices may move to the suburbs where there are high concentrations of their employees.” Brokers from the large firms and networks in the Central, Great Lakes and Northwest regions expressed a low level of confidence in their local markets in the SIOR survey. A broker from Overland, Kansas commented that showing space to prospects is more difficult, and felt that the de-densification of office space to allow more distancing would offset any increase in remote working. He also expects employees to open offices in the suburbs, as entering a three-to-six story suburban office building makes more sense in a social distancing environment when high-rise office buildings only allow one to four occupants in an elevator at one time. A SIOR in San Diego remained optimistic, stating “The unmatched value of a dedicated space for commercial innovation and professional collaboration will endure, even if some long-term design changes occur.”