A look back at major office market downdrafts and the opportunities that followed
“Black Swans” are rare, major, and unpredictable events in the course of economic or world history that have potentially severe consequences. They are the pins which burst an economic growth bubble, often leading to increased unemployment, decreased consumer spending, and lower capital investments by small and large companies. Today we are watching slow-motion destruction in the wake of the most recent Black Swan event: the exponential spread of the COVID-19 pandemic across the globe.
While this one is different from 9/11 or the 2008 global financial crisis, given the pervasive fear associated with personal health and spike in unemployment, there are many likely scenarios here that will produce opportunities for office tenants and expose trend-curve changes once the turbulence subsides. Studying the recovery cycles from moments like these, we find common outcomes of opportunities for tenants in cost and space reduction, as well as increased lease negotiation leverage and term flexibility, that should provide relief for occupiers on the other side of this crisis.