Geee Posted January 10 Share Posted January 10 Axios Office vacancies hit a record high in the fourth quarter of last year, surpassing previous peaks last reached in 1991 and 1986, according to data from Moody's Analytics out Monday. Why it matters: Office buildings are emptying around the U.S., as companies continue to adapt to the new norms of remote and hybrid work by shrinking their physical footprints. The transition marks an enormous societal shift as Americans adjust to a whole new way of working and living — big changes are underfoot in cities and suburbs around the country. Yet it's happening so slowly and in such a predictable fashion, that the impact on the overall economy so far has been minimal. State of play: The stickiness of hybrid work arrangements "muted office demand," per the report, which says 2023 was "the most downbeat" year in the office sector since the global financial crisis. "Even though 2023 was largely a year of companies and organizations calling people back into the office, we're not seeing that it's typically the standard five days a week back," said Nick Luettke, an associate economist at Moody's Analytics CRE. "Hybrid models and flexibility [has] really become the name of the game." Zoom out: Unlike past crises, vacancies increased last year while the economy was in good shape overall. "If the soft landing is pulled off, [vacancy] numbers are probably not going to rise to much higher than this," Luettke said. "But if things do take a turn for the worst in 2024, it'll probably just keep going for much of the year." 1 Link to comment Share on other sites More sharing options...
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