Daily market intelligence on mortgages, equity raising, investment sales, and CMBS.

Wednesday, 13 May 2020

Coronavirus Pandemic Could Reverse Trend of Shrinking Office Spaces

The steady decline in the amount of office space that companies allocate per employee over recent years could very well be halted, and reversed, as a result of the coronavirus pandemic as companies make efforts to adopt social distancing protocols.

Commercial Real Estate Direct Staff Report

The steady decline in the amount of office space that companies allocate per employee over recent years could very well be halted as a result of the coronavirus pandemic as companies make efforts to adopt social distancing protocols.

"Tenants will look for larger stairwells, wider floor-to-ceiling heights, stronger air conditioning and filtration systems and fewer floors for shorter elevator travel," predicted John Kilroy, chairman and chief executive of Kilroy Realty Corp. on a recent conference call with analysts.

Office users, added Owen Thomas, chief executive of Boston Properties, will want floor plans that are less dense. The Boston REIT owns 196 office properties with 52 million square feet in some of the country's densest markets: New York City, Boston, Los Angeles, San Francisco and Washington, D.C.

"The biggest conversation we're having: they're asking do we have enough space, because clearly when people start to come back to work, densities are going to have to be reduced from the trend that we started seeing over the last 10 years," said Brian Kingston, chief executive of Brookfield Property Partners, which owns 134 office properties with 94 million sf in some of the country's largest, most dense markets.

"So while there may be some negative impact from a slowdown in business expansion and job losses and that sort of thing," Kingston noted, "there's a huge counterweight to it, which is we think that for those businesses to reopen, they're going to need to reduce density. And that's going to drive office demand."

The amount of space that companies allocated per employee has been on the decline over the years....





weekly-call-to-action

“The Weekly”

“The Weekly” is Commercial Real Estate Direct’s PDF newsletter, sent to subscribers every Friday morning. With over 100 news stories published on Commercial Real Estate Direct each week, “The Weekly” features the top stories in commercial real estate that industry participants need to know first. “The Weekly” also contains:

  • Breaking mortgage, CMBS, and REIT news

  • Quarterly league tables with rankings of B-piece buyers, book runners, and lenders

  • Industry moves and changes in “The Insider“

Data Digest

 

CMBS DELINQUENCY VOLUME

dqdataFP1

 

CMBS SPECIAL SERVICING VOLUME

sschartfp

Top Bookrunners Domestic, Private-Label CMBS - 2017
Investment Bank #Deals Vol$mln MktShr%
Goldman Sachs 17.59 11,819.34 13.68
JPMorgan Securities 14.52 10,968.11 12.70
Citigroup 12.04 10,012.71 11.59
Wells Fargo Securities 14.02 9,936.06 11.50
Deutsche Bank 12.55 9,879.74 11.44

 

RCA CPPI

 

cppichart FP

 

 

CMBS 2.0 Spreads

AAAspreads

Top CMBS Loan Contributors - 2017
Lender #Loans Vol$mln MktShr%
Goldman Sachs 146.89 11,719.34 13.63
JPMorgan Chase Bank 117.68 10,114.14 11.76
Deutsche Bank 198.48 9,689.97 11.27
Morgan Stanley 166.18 8,539.78 9.93
Citigroup 199.05 8,088.24 9.41

 

 

 

REITCafe

  • Challenging Retail Environment Weights on REITs
    Mixed economic news is weighing on retail markets, pushing REIT performance down in 2015. This week, the National Retail Federation announced that back-to-school spending is expected to be down 9.3% in 2015. This news came on the heels of a report from the Commerce Department stating that retail sales declined 0.3%...
     
  • US REITs Feeling Effects from Turmoil in Greece and China
    International economic forces have taken center stage this week, affecting both US stock markets and REITs. The crash in the Chinese stock market and ongoing concerns about the future of Greece in the eurozone drove markets down during the first half of the week. REITs fared better than the overall market...

  • What Does Increased Construction Mean for Apartment REITs?
    REITs so far this year have raised $17.1 billion of capital through the sale of unsecured notes, bringing the total raised over the past two and a half years to just more than $75 billion. That’s more than they raised during the previous five years. The massive volume shouldn’t be a surprise as it comes while the yield from 10-year Treasury bonds, the benchmark...
shouldn’t be a surprise as it comes while the yield from 10-year Treasury bonds, the benchmark against which most REIT’s price their bonds
warehouse-backstage