CMCT - Office REITs: Vaccine Can't Cure WFH Epidemic

• Is the "Work-From-Home Era" here to stay? Few property sectors have been hit harder by the pandemic than office REITs, which have been slammed as workspaces continue to sit empty.
• COVID-19 has accelerated the pre-existing trends of increased workplace efficiency. Survey data and commentary from corporations indicate that the WFH paradigm is here to stay long after the pandemic subsides.
• Rent collection hasn't yet been a major concern, but conditions are likely to deteriorate as the office market - which has been essentially frozen since April - begins to thaw.
• Power to the tenants: market rents are set to decline substantially in the nation's largest office markets. Office REITs will face a supply overhang for much of the next decade.
• We've remained bearish on office REITs, but do see pockets of value in the Sunbelt and suburban-focused office REITs, but as WFH become the norm, the office sector's loss is the housing market's gain.

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