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Downsizing office space – macro trend or overreaction

Out of 315 CEOs answering a corporate survey published in KPMG’s “2020 CEO Outlook: Covid-19 Special Edition,” 69% checked the “We will be downsizing office space” box. The survey also found that 73% of the executives agreed that remote working has widened their available talent pool.

  • Office leasing by the numbersMonthly absorption was negative – for the sixth consecutive month – at 3.84 million SF, while the average asking rent was lower by 1.3% since July to $78.01 per SF. The Manhattan office market’s overall availability rate increased to 11.8%, which is the highest rate since 2013. 
  • Be Smart: Manhattan added 1.3 million SF available for sublet to its office market in August, a jump from the nearly 1 million SF added in July. Sublet inventory has ballooned to make up 23% of all available space: Colliers noted that when the amount of sublet space climbs past 25% — which it did during the previous two recessions — the city starts dealing with a “glut” that “really competes with direct space.” 
  • The survey: KPMG initially surveyed 1,300 CEOs in January and February, and conducted a follow-up in July/August survey of 315 chief executives across the globe to understand how CEO thinking has evolved during the crisis. All respondents have annual revenue over $500 million and a third have more than $10 billion in annual revenue, , The Real Deal noted. [KPMG+Colliers+CO+TRD]

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