Off The Charts

The distribution of COVID-19 vaccines is fueling optimism that Americans will return to the ways they used to shop, travel and work before the pandemic.

That would be a welcome change for owners of office buildings, hotels and retail space. These have been the hardest-hit areas of commercial real estate as the pandemic forced many businesses to shut down or operate on a limited basis.

But even as the U.S. economy appears set to roar back to life this year, demand trends for commercial real estate could take longer to recover as businesses reassess their needs now that the pandemic has led to more people working remotely and shopping online.

This likely means higher vacancy rates and declining rents this year, especially for retail and office property owners, says Thomas LaSalvia, senior economist with Moody’s Analytics.