General Motors and Ford both discussed their “return to the office” plans, and the news is not great for office landlords. Both companies plan to reduce their headcount post-pandemic. This will likely result in reduced required square feet. That will mean higher vacancies, as the open office space trickles down through the food chain.
The impact of even slightly increased vacancy rates could lead to lower leasing rates, which will have a direct impact on commercial building valuations. Eventually, if those values decrease enough, this could have an impact on municipal budgets, as reduced values will eventually lead to lower property tax revenues.
While it is likely still to early to ring the alarm bells for office buildings, there are definitely storm clouds on the horizon.
Also on the radar this week is the continued news coverage of the blistering pace of the housing market in Michigan. While this is starting to sound like a broken record, this is one of the most extreme seller markets in history. There is less than one month of inventory in the Tri-County area.
