The COVID-19 pandemic has forced some states to impose strict stay-at-home orders that are adversely affecting many industries. This is leading the U.S. economy into a recession that will result in very sharp declines in GDP for H1 2020 and in job losses, particularly in the retail, food & beverage and transportation sectors.
While some flexible office locations have temporarily closed, those that remain open are experiencing little to no use given shelter-in-place restrictions. Many operators are entering rent renegotiations with landlords to remain solvent. Several small flex operators have permanently closed.
Flexible office commitments1 totaled 1.0 million sq. ft. in Q1, remaining at a muted level for the second consecutive quarter. For the four quarters ending Q1 2020, commitments from flex operators were down by 32.1% year-over-year. For the first time since its founding, WeWork accounted for no commitments this quarter. Other providers postponed any expansion plans.