HOUSTON – (Realty News Report) – Economist Jeff Havsy, commercial real estate industry practice lead at Moody’s, predicts the Federal Reserve will announce a quarter-percentage-point interest-rate cut on Wednesday.
Speaking at the CommGate Economic Outlook event last week at the Houston Country Club, Havsy discussed conditions across office and retail markets.
Office vacancy rates have climbed as many companies reduced their footprint and embraced remote work during the COVID era. More recently, however, a number of firms are emphasizing a return-to-office strategy rather than full-time remote arrangements.
Havsy noted that in-person work can be particularly valuable for junior staff and new hires. “This is especially valuable to junior staff and new hires. Fully remote work is not as productive,” he said.
Reflecting on workplace design, Havsy—formerly CBRE’s chief economist for the Americas—criticized the open floor plan, calling it “the worst productivity enhancement in 30 years.”
He also described an imbalance in the office sector: while construction has slowed, demolition has not kept pace with the amount of obsolete or surplus space. “The office market is not overbuilt; it’s under-demolished,” Havsy said, adding that this dynamic will likely result in more building demolitions over time.
By contrast, retail is performing relatively well. Many retail centers remain strong, and regional malls are evolving through redevelopment that introduces new retail concepts and entertainment offerings. “Retail is now the cleanest shirt in the laundry,” Havsy said. “Retail is the darling. Many storefronts don’t need a Class A mall—some concepts succeed outside of traditional mall environments.”
At CBRE, Havsy led the CBRE Econometric Advisors team. His past roles include serving on the board of the Real Estate Research Institute (RERI), working as a senior economist with the Chicago Board of Trade, and serving as director of research for the National Council of Real Estate Investment Fiduciaries. About three years ago, he joined Moody’s, which supplies data, displays property listings, and provides services to CommGate, the commercial real estate division of the Houston Association of Realtors.
Sept. 16, 2024 Realty News Report Copyright 2024
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File: Expect 25 Basis Point Cut