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Alexis Fermanis SIOR Director of Communications

SIOR Survey Shows Coronavirus Impact on Office and Industrial Markets in 2020 Q1


The SIOR Commercial Real Estate Index—an index that is based on 10 indicators of sales/acquisitions, leasing, and development compiled from a survey of SIOR members—fell to 120 in 2020 Q1, a 16% drop from the prior quarter’s reading and a 12% drop from the level one year ago. The index’s decline is yet another indicator of the unintended economic effect of the social distancing measures put in place to combat the spread of COVID-19.

The office sector fell more steeply than industrial, as businesses grapple with the short- and long-term effects of the economic shutdown. The SIOR Office Index dropped 29% while the SIOR Industrial Index dropped 18%, rates of decline not seen even during the Great Recession. The index fell across all regions as well, with the largest drop in the West region:  Northeast (-9%), Midwest (-7%), South (-14%), and West (-19%).

Forty percent of survey respondents reported weaker leasing activity while 8% reported a decrease in asking rents from a year ago. A majority (59%) also reported tighter vacancy conditions and 55% reported tight subleasing availability compared to normal volume. Thirty-three percent reported below historical level for development activity and 55% reported that site acquisition costs are rising, compared to 74% in the prior quarter. Seventy-four percent of respondents expect the economy to have a negative effect on their market in the upcoming quarter, up from 9% in the prior quarter.

Social distancing has resulted in an unprecedented loss of jobs, with 20 million people filing for unemployment insurance during the weeks of March 21 through April 11. In March 2020, 701,000 non-farm employment jobs were lost in all industries (2-digit level) except in the utilities, wholesale trade, information, and the government sectors. Sixty-five percent of the job losses were in leisure and hospitality (-459,000). Professional and business services lost 52,000 jobs.

In NAR’s April 2020 Commercial Market Trends and Outlook Report, they noted the demand for industrial properties is tilted upwards. The shift towards online shopping will only continue to increase the demand for industrial warehouses, which will also likely be in demand to serve as armories for storing equipment and other personal protection equipment in preparation for the resurgence of the virus. The outlook for the office sector is tilted on the downside. Businesses will likely put a hold on new hires and leases will likely become more short-term. They may opt for smaller office spaces so as not to be faced with high rent costs if another health crisis emerges. Workers who may have wanted to work in shared spaces may remain wary for some time to keep safe and to work from home rather than in co-working spaces.

A full report of survey responses is available now at


Media Contact
Alexis Fermanis SIOR Director of Communications