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Article
Publication date: 30 June 2023

Kevin Fagan, Xiaodi Li, Ermengarde Jabir and Victor Calanog

The authors take a historical perspective and compare office market performance metrics and CMBS loan delinquency rates over the past two years with previous downturns.

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Abstract

Purpose

The authors take a historical perspective and compare office market performance metrics and CMBS loan delinquency rates over the past two years with previous downturns.

Design/methodology/approach

What will happen to the office sector in the post-pandemic era? we examine this question from three perspectives. First, the authors discuss the (short-term) risk of commercial real estate investment with high inflation and rising interest rates. If investors want to use CRE as an inflationary hedge, the cash flow must increase enough to counteract growing cap rates given rising interest rates.

Findings

As it turns out, the COVID-19 recession has been notably innocuous. Third, the authors focus on medical office space – an emerging investment option for the office sector.

Practical implications

The authors remain somewhat positive (or at least less downbeat) about the future of the office market based on the data they reviewed.

Originality/value

The office market is experiencing an odyssey rather than an exodus, at least in the short run. However, the authors remain cautious and they are monitoring key signs, prepared for the possibility of (r)evolutionary change in the office sector.

Details

Journal of Property Investment & Finance, vol. 41 no. 5
Type: Research Article
ISSN: 1463-578X

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