The demand for office sector space going forward will be shaped by two main factors—densification and remote working, according to Danny Ismail, senior analyst at Green Street Advisors.
In a video interview in conjunction with Nareit’s REITweek: Virtual Investor Conference (being held June 2-4), Ismail said the trend toward densification, or shrinking the office footprint while adding more employees, is likely to reverse in the future and actually be a benefit to office demand.
At the same time, remote working is likely to pick up steam as more and more companies adopt remote working practices, which will likely have a “significant” impact on office demand, he said.
“Overall, office demand will likely be reduced in the future but there are some counterbalances that will prevent everyone from working from home,” Ismail said.
Meanwhile, Ismail noted that office values are down about 10% nationally. He also said Green Street favors non-gateway markets as they view them as less economically sensitive than their gateway peers.