Only $7.7 billion of transactions are so far logged, compared to $21.7 billion in Q2 2019
SANTA BARBARA, Calif., Aug. 26, 2020 – Transaction activity in the commercial office sector has fallen off, with a quarter-over-quarter drop in activity of 64.5%, according to the newly released Yardi Matrix® commercial office report.
The report indicates that the impact of COVID-19 on typical office activities has finally reached the transactional sector and continued repercussions are likely into 2021. The national average full-service equivalent listing rate fell to $38.21 in July, down 8 cents from June and 23 cents from July of 2019 (-0.6%). The national vacancy rate was 13.6%.
“Despite deal volume drying up, the price per square foot is higher in 2020 than 2019. Buyers, desiring pre-pandemic target returns for their investments, have found underwriting potential deals to be much more difficult knowing that it may be 12 to 24 months before properties start generating pre-pandemic levels of income,” states the report.
During the first seven months of the year, 34.9 million square feet of office space was completed, just below 2019’s pace of 76.0 million total square feet. The vast majority of 2020 completions (85.9%), are properties rated as A+ or A continuing a trend that began in the middle of the last decade.
Nationally, employment in office-using sectors experienced job losses at a rate of 5.6% year-over-year in July, 190 basis points lower than the economy as a whole, which was down 7.5%. Employment in the financial activities sector has suffered far fewer losses than the information, professional and business services sectors.
Southeastern markets including Tampa, Nashville, Miami and Atlanta had the highest absolute rate growth year-over-year. Read the latest Yardi Matrix report to discover which secondary and tertiary tech markets could attract future development and investment interest.
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