Cushman & Wakefield Releases 2020 Global Office Impact Study

October 20, 2020 - 10:25
Cushman & Wakefield Releases 2020 Global Office Impact Study

  • Global study predictsoffice sector recovery to be slow, but full recovery expected despitework-from-home trend
  • Less affected bythe work-from-home trend, Hong Kong office market is expected to see a certainlevel of momentum starting 2H 2021

HONG KONG, CHINA - Media OutReach- 19 October 2020 -Cushman & Wakefield (NYSE: CWK), a leading global real estate servicesfirm, recently released its first-ever Global Office Impact Study, projectingthat the world's office leasing fundamentals will be significantly impacted bythe COVID-19 recession and the work-from-home trend, but they will ultimatelybegin to improve in 2022 and will fully recover by 2025. The full recoverytimeline is consistent with what was observed during the Great Recession, butat a slight lag due to the work-from-home trend. The report was developed bythe firm's newly organized Global Think Tank, a team of senior researchers andeconomists from around the world. The study analyzed the cyclical andstructural changes impacting the global office market and the implications forrecovery.

"We set out to answer the foundational and somewhat ambiguous questionof 'what will become of the office' by taking a deep, scientific look at theforces created by this pandemic and the cumulative impacts on office sectorfundamentals," said Kevin Thorpe, Cushman & Wakefield's Chief Economistand Global Head of Research. "We've examined the collective impact of theseforces, including job losses, office vacancy and rental rates, geographiccharacteristics, and work from home expansion, to establish future-lookingscenarios that, under our base case, ultimately project a full global office marketrecovery. Of course, all real estate is intensely local, and not every localmarket will follow the same path to recovery.

Key findings from the2020 Global Office Impact Study are concentrated on the full economic andemployment recovery anticipated for Q1 2022, and the corresponding demand foroffice space as vacancies begin trending downwards and rental rates beginappreciating. By 2025, global office vacancy is anticipated to return topre-crisis levels of approximately 11%, with rents returning to pre-crisis peaklevels.

"Even though the impact of work-from-home trends will slow the officemarket recovery, the overall growth in office-using job sectors along with manyother factors -- including agglomeration, culture/branding, and productivity --collectively indicate that the office will continue to play an important rolein the economy going forward, said Rebecca Rockey, Global Head ofForecasting at Cushman & Wakefield. "With this study, we're lookinginto an uncertain environment through the lens of evidence, data, and science."

The study finds that increased flexible working and work-from-homepractices are less prevalent across Asia Pacific as a whole compared toother regions and are unlikely to have meaningful alteration on the outlook forthe region's office market. In Hong Kong, office demand will likely remaindriven by cost-saving relocations over the near-term. Keith Hemshall,Cushman & Wakefield's Executive Director & Head of Office Service, HongKong said: "Should the Covid-19 vaccine be available by mid-2021, we expectthe market to regain some positive momentum in the second half. Leasingactivity is likely to be concentrated in upcoming new developments that offer highquality specifications and attractive commercial terms for pre-commitment.  Some of the key developments including TwoTaikoo Place (Swire Properties) in Quarry Bay, AIRSIDE (Nan Fung Group) in KaiTak, 98 How Ming Street (Sun Hung Kai Properties) in Kwun Tong and 91 King LamStreet (New World Development) in Cheung Sha Wan will draw significant tenantinterest." In view of this, Cushman & Wakefield forecasts the city's GradeA office net absorption will return to a positive level in 2022, amounting toaround 1.1 million sq ft.

However, from a Landlord perspective, the 3.8 million sq ft of newsupply forecast for 2022 will be the highest annual total on record and willexert significant downward pressure on rents. Eric Chong, Associate Directorof Research Hong Kong, at Cushman & Wakefield, said: "Despite apositive take-up forecast in 2022 and 2023, landlords in the city are likely tocome under increasing pressure due to these large-scale new developmentsentering the market. We expect average rentals in Overall and Greater Centralto decline by 25-30% and 32-37% between Q3 2020 and Q4 2023 before bottomingout in 2024."  

The 2020 Global Office Impact Study is the first of a four-part series,which will provide a new and thoughtful look into the future of the office, andthe role it will play in a post-pandemic environment.

Read the 2020Global Office Impact Study here

About Cushman & Wakefield

Cushman & Wakefield (NYSE: CWK) is aleading global real estate services firm that delivers exceptional value forreal estate occupiers and owners. Cushman & Wakefield is among the largestreal estate services firms with approximately 53,000 employees in 400 officesand 60 countries. Across Greater China, there are 22 offices servicing the localmarket. The company won four of the top awards in the Euromoney Survey 2017 and2018 in the categories of Overall, Agency Letting/Sales, Valuation and Researchin China. In 2019, the firm had revenue of $8.8 billion across core services ofproperty, facilities and project management, leasing, capital markets,valuation and other services. To learn more, visit follow us on LinkedIn (