In June, Capital Economics published a report written by the firm’s deputy chief property economist, Kiran Raichura, suggesting that the “35% plunge in office values we’re forecasting by end-2025 is unlikely to be recovered even by 2040.” To put it simply, it’s unlikely that offices will regain their peak values in the next 17 years because lower demand that’s a direct result of remote work (a trend that’s proving to outlast the pandemic), in their view.
In an updated report, also written by Raichura and Capital Economics’ assistant economist, Charlie Cornes, they said that “further downgrades to our national office outlook have driven corresponding cuts to return prospects in our metro-level forecasts this quarter.” They are broken down by the six major markets, southern metros, and western metros. That being said, the firm forecasts San Francisco office values will drop 40%, at the very least, in the next couple of years, between 2023 and 2025.
