NEW YORK--(BUSINESS WIRE)--The increasing implementation of open-plan offices will contribute to vacancies and reduce the ability of some landlords to re-lease their entire spaces, says Fitch Ratings. This trend continues at a difficult time for the sector. While it improved in 2013, the office sector led U.S. CMBS defaults for the third year in a row. We recorded 141 loans totaling $2.6 billion in 2013 versus 172 office loans totaling $3.3 billion in 2012, representing a 21% decline, according to our report, "U.S. CMBS 2013 Loan Default Study."
According to a survey by CoreNet Global, companies allocated 225 square feet per employee in 2010. That fell to 150 square feet or less per worker in 2013, a reduction of approximately one-third. This trend is expected to continue as open plans are optimized and other companies join the trend.
We expect the office sector to continue to have a mixed recovery as major metropolitan office markets continue to outperform secondary and suburban markets. In addition to the trend toward open plans, many office markets will continue to be hampered by unemployment, slow job growth and significant rent concessions.
The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings.
Applicable Criteria and Related Research:
U.S. CMBS 2013 Loan Default Study (Stable Performance to Continue)