Point Cut, CommGate Told: Expect 25 Basis

In Houston, The Federal Reserve will announce a quarter-percentage-point rate point interest rate cut Wednesday, predicts economist Jeff Havsy, the commercial real estate industry practice lead at Moody’s.

Speaking at the CommGate Economic Outlook event last week at the Houston Country Club, Havsy commented on the office markets.

Office vacancy rates have risen as companies have reduced the size of their offices. In the Covid era. many companies began to allow employees to work from home.

Jeff Havsy

Havsy said more companies are stressing a return to office work as opposed to remote work.

“This is especially valuable to junior staff and new hires,” Havsy said. ”Fully remote work is not as productive.”

Havsy, formerly CBRE’s Chief Economist for the Americas, also commented that the open floor plan workplace “is the worst productivity enhancement in 30 years.”

The oversupply of office space and the growing number of buildings become obsolete will lead to a growing number of office demolitions.

“The office market is not overbuilt, they’re under-demolished,” said Havsy.

Retail centers are one of the strongest segments, although many large regional malls are moving toward redevelopment with new kinds of retail tenants and entertainment venues.

Retail is now the cleanest shirt in the laundry,” he surmises. “Retail is the darling. Many storefronts don’t need a Class A mall, they are doing well because some concepts are not dependent on Class A malls,“ Havsy said.

At CBRE, Havsy was responsible for guiding the CBRE Econometric Advisors (CBRE EA) team. He previously served as a board member for the Real Estate Research Institute (RERI), worked as senior economist with the Chicago Board of Trade and was the director of research for the National Council of Real Estate Investment Fiduciaries.

About three years ago, Havsy joined Moody’s which supplies data, displays property listings, and provides other services to CommGate, which is the commercial real estate division of the Houston Association of Realtors.