While fashion-dominated shopping malls have not coped well with the pandemic globally, they have fared slightly better in China and Canada. In China, growth has been fueled by people’s inability to travel abroad, which has led to strong demand for domestic fashion retailers, the report said. Shopping centers focused on grocery stores, where there is a balance between discretionary and non-discretionary goods, performed well.
There are huge differences in office real estate between cities and regions, Gordon said.
According to him, in the first half of 2021, the percentage of employees returning to work in offices in Tokyo and Shanghai was at the mid-90% level. In the US, however, the percentage ranges from 40% in cities like Dallas to 10% in New York, Mr Gordon said.
The report said LaSalle expects volatility in office vacancy rates in the Asia-Pacific region due to changes in office policies, including restrictions on the percentage of employees in offices as part of the COVID-19 emergency in Japan. Regardless, LaSalle is committed to investing in headquarters and non-core offices in Tokyo as well as Osaka because while vacancy rates have increased in these two cities, they have the highest occupancy rates in the Asia-Pacific region, the report said.
According to him, the same trends are observed in Europe: London, especially central London, is in the low price segment, and business parks in the suburbs, where 50% to 60% of workers return to the office, he said.
“Don’t get too carried away with getting back to work,” because it’s a multi-year, multi-step process, ”said Mr. Gordon. “This statistic is very striking, here today, but it will change in six months,” he added.
While rents continue to be paid around the world, LaSalle expects tenants to make important decisions about their office needs after the lease expires, Mr. Gordon said.
One small metric, which he calls the “canary in the coal mine,” is that sublease office space has grown to record levels in San Francisco and New York.
“Many tenants are doing everything they can to cut losses and sublet office space,” said Mr. Gordon. “They understand that their workforce will never return, at least not to San Francisco and New York.”
According to him, people in the United States are more mobile than in other countries of the world.
Some people are not going to return to big cities such as San Francisco and New York, but instead choose the cities in the United States that have had the strongest influx of people, such as Phoenix; Jacksonville, Florida; Tampa, Florida; and Austin, Texas, Mr. Gordon said.
Indeed, the report notes a mismatch between the inventory located in the largest advanced cities and the demand of renters located in the secondary markets with a higher quality of life or lower housing prices.