The U.S. Office Outlook Remains Stable Despite Delayed Returns and Accelerated Virtual Working Trends

DBRS Morningstar published a commentary reviewing our outlook for the office sector, especially as related to CMBS loans and REITs in the U.S. In our view, the U.S. office market is likely to see a rebound from the coronavirus pandemic induced recession even as net absorption has underperformed and construction remains elevated. The amount of subleasable space continues to shrink, declines in vacancy were seen in some major metropolitan areas in Q2 2021, and office using employment continues to grow amid the reopening economy. Downside risks from coronavirus cases and hybrid working trends present a medium-term challenge, but a strong rebound from the coronavirus-induced recession, resulting in continued job growth in office-using sectors, will eventually overcome this.