HAUZ - Commercial Real Estate: The Office Market In A Post?COVID World

• The pandemic reshaped the market and created massive dispersion in performance between sectors - with the winners and losers largely sector-specific.
• The hotel sector has been a short-term loser, while retail is a long-term loser. The industrial sector has been the big winner, with institutional demand at record highs supported by secular e-commerce tailwinds.
• The office sector is expected to hold both winners and losers. Tenants aren't defaulting on their leases even though they are not in the office, but clearly, pressures will build as smaller tenant leases rollover.
• On average, we believe employers’ decisions to offer flextime and to lessen worker density in prime core office space will offset each other; overall prime office space demand will be much less affected by working from home than in secondary office locations and of secondary quality.

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