Moody’s Analytics is warning that the US office market will have to evolve quickly in order to adapt to the new conditions produced by the COVID-19 pandemic. It warns that the county’rs GDP could fall by an unprecedented 30 percent on an annualized basis in the second quarter of 2020, which would be three times as bad as the previous record fall dating back to 1958. “Over the course of all of 2020, US GDP is expected to fall by 6.6 percent, a larger magnitude than the decline in economic activity in 2008-2009, concentrated mostly in the second quarter, prior to reopening the economy,” wrote the company in its most recent study. It cites a survey by NAREIM which states that more than half of all office tenants have asked for some form of rent relief. “Effective rents are expected to decline by 10.5% at the national level in 2020 alone, a larger magnitude of decline than 2009. For some markets like New York, effective rents may fall by over 20 percent.”
