Podcast: FTI Consulting Experts’ Hub: Expect More Office Distress in H2 2023
Is the Office Sector As We Knew It Prior to 2020 Dead – Or Is It a Myth?
July 27, 2023
Rob Raymond, Managing Director in FTI Consulting’s Real Estate Solutions practice, sat down with Commercial Property Executive Senior Editor Laura Calugar to discuss what’s to come for the office sector for the rest of 2023.
Rob Raymond began his career in the wake of the 2009 financial crisis and his expertise and perspective has led him to specialize in strategically positioning real estate and workplaces, ensuring they achieve maximum efficiency and cost-effectiveness. While the outlook on the office sector may be daunting, Rob still sees many silver linings that differentiates itself from what the office sector experienced in 2009.
Owners and occupiers must be flexible throughout this period, and Rob has seen a lot of cooperation from both sides. Delinquencies and loan defaults have signaled to the sector that the product needs to be adapted to these changes and that the return to office movement is not solely on the occupiers. In the second half of the year, Rob predicts that lenders and borrowers will continue to face the same challenges of the first half of the year despite the temporary hold on interest rate increases. Rob looks to real estate innovators who will use this distress as a chance to adapt their approaches to the traditional office sector and emerge with the office of the next generation.
Time Breakdown on Main Topics Covered:
- Is the death of the office just a myth? (0:42)
- The office landscape today vs. 2009 (2:57)
- Will office values ever recover? (3:45)
- The flexible approach (5:04)
- Taking advantage of employees’ reluctance to return to the office (6:39)
- Is the bulk of problems in Class B&C office? (8:40)
- What delinquencies and loan defaults mean for the sector (09:55)
- Expectations for lenders and borrowers in the second half of the year (10:51)
- Prepare for more office distress (12:00)
- Will the conversions trend pick up steam? (13:39)
- How cities are recovering from the pandemic at different rates (16:28)
- Are suburban offices strengthening their comeback? (18:34)
- Cities or regions expected to outperform going forward (20:41)