Moody’s Analytics: Retail rents to decline 11.1% this year
The retail properties and office property sectors are expected to see major declines in rents this year due to the COVID-19 pandemic.
According to Moody’s Analytics’ new forecasts for commercial real estate rents and vacancies, the effective rents of retail properties are expected to fall by 11.1% this year given wide-scale store closures and the rising threat to the sector posed by e-commerce.
Close behind is the office property sector, which was experiencing downward pressure on the usage intensity of office space even before the COVID-19 crisis and is now challenged by the shift to remote working, Moody’s said. Effective rents in the sector are projected to fall 10.4% nationally in 2020, including as much as 21% in New York and other markets.
Moody’s expects the vacancy rate for office spaces rising to 19.3% in 2020, 19.9% in 2021 and 20.0% in 2022.