Winter Issue 2022 - 35

2021 ULI FALL MEETING
John Rivard, Alejandro Romero
Suburban Office
Buildings Bear
Up Better in Face
of Pandemic
H. LEE MURPHY
As doubts persist about the comeback of
the office sector once the COVID-19 pandemic
is tamed, it has become clear that the damage
sustained so far is not spread evenly across the
marketplace. Suburban office buildings, close to
where many workers actually live, are faring far
better so far than central business district (CBD)
high-rises, according to a Real Capital Analytics
(RCA) study.
In the 18 months through August 2021, the
prices paid for downtown offices had fallen 3.7
percent, the RCA data showed, while prices paid
for suburban office properties actually rose a
bullish 14.8 percent. In fact, for the first time in
memory, the office vacancies in CBDs, at 20.2
percent, were higher than those in the suburbs,
at 19 percent, according to Cushman &
Wakefield data.
" We do think the move from urban to suburban
is real, " said John Rivard, chief investment
officer at Accesso Partners, a Florida-based office
owner, in a concurrent session titled " Lessons
Learned from the Pandemic: The Role of the New
Office in a Post-COVID World. "
Recovery in the office market has inched forward
to a point where offices in the 10 largest
U.S. markets have reached 36 percent worker
occupancy, Rivard said, though New York City is
lagging at just 30 percent. " This is a pandemic
high. The thinking is that this will continue to
grow, and when it reaches a certain tipping
point-perhaps 50 percent-it will ramp up
faster, " he said.
Alejandro Romero, associate director of investments
for Accesso, added that the 50 percent
worker return hurdle is a key. " Once we get to
the point that half of all people have returned to
their offices, then 90 percent of the employees
who care about their careers will probably want
to return to their offices, " he said. When that happens,
he and Rivard agreed, an increase in office
building valuations would almost certainly follow.
And yet the breakdown of workers' attitudes is
Chicago's iconic waterfront.
split across generations. A Gensler study recent
found that 31 percent of the youngest workers,
WINTER 2022
URBAN LAND
33
ULI/ALTIMIRA

Winter Issue 2022

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