According to CoStar Group Vice President of Market Analytics John Affleck in a recent video report, COVID-19 has caused commercial real estate leasing activity to fall to historically low levels. Leasing activity usually tends to be resilient in downturns, for the simple reason that leases expire, and tenants have to make decisions about their space. Social distancing and working at home have made coordinating a new lease all the more difficult.
CoStar’s lease comp data shows that 24,000 commercial leases expired during the lockdown — and another 120,000 will expire over the next 18 months. CoStar has collected information across more than seven million lease comps to estimate typical lease lengths and terms, which can be applied to our census of more than three million commercial real estate properties to estimate the total number of additional leases likely to expire over the next 18 months.
In total, our analysts estimate that more than two million leases will expire through the end of 2021, totaling more than 15 billion square feet of space. The pandemic adds more reasons for companies to reconsider their space requirements: Firms are rethinking office layouts with more space per worker to meet social distancing mandates. Some companies may seek satellite spaces so that their employees don’t need to ride crowded public transit to work every day. Others may decide to continue working at home, and seek to downsize their office needs. And some will see this as a rare opportunity to sign for high-quality space at a discount.
Leasing volume will return — and may even hit record levels as local economies reopen and pent-up activity resumes. As firms reinvent the office, the real estate industry will reinvent the leasing process. We at the CoStar Group are proud to be leading this effort. Our platforms offer powerful online search capabilities, virtual walk-throughs, guidance on the leasing process and facilitated communication with brokers and landlords.
To learn more about the data behind this article and what CoStar Group has to offer, visit https://www.costargroup.com/.
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