Downtown Office and Multifamily Product May be Next Casualties of COVID-19

BOSTON, MA -- Boston Fed President Eric Rosengren lended his thought to Bloomberg for a piece about how novel Coronavirus pandemic will affect commercial real estate. This came after a recent bi-annual Financial Stability Report released by the Fed, which found that commercial real estate may be bound for a substantial decrease in prices thanks to pandemic-inspired economic disruption. Rosengren spoke a few indicators causing concern, such as an expected permanent shift to remote work for many companies, that’s likely to lead to decreased demand in the office sector. However, Downtown Boston’s multifamily product is unlikely to be spared. The office sector, obviously, is expected to feel the effects, but Rosengren raises another asset class that could find itself struggling with this trend as well: downtown multifamily. “I do think some multifamily housing in downtown areas will be more challenged as Americans rethink whether they want to live downtown or in the suburbs,” said Rosengren, who explained that many residents may opt for larger suburban homes that lend themselves to home offices, especially if they no longer have to commute. Indeed, a recent Zillow survey found that a dedicated office is at the top of many homeseekers’ wishlists, and that respondents were very open to moving farther from a city if they didn’t have to worry about commuting to the center. Not surprisingly, Zillow listings mentioning a home office have jumped by 10% since April 2019. Office product may also…