| 
Office rents are expected to decline by 14.3 percent in Greater Boston while retail rents drop 9.7 percent in 2020 as the two property sectors absorb the effects of the COVID-19 pandemic, according to a new research report.
Moody’s Analytics Real Estate Information Services (REIS) said the pandemic will burden commercial real estate sectors in a metro that already had modest job growth in 2019.
The effects of social distancing policies could push national office vacancies above 20 percent in 2021, and rents in some markets such as New York could drop nearly 25 percent, Moody’s Analytics REIS said.
Greater Boston’s office vacancy rate of 12.7 percent is below the national average of 16.8 percent, and office rents rose 2.4 percent in 2019, the report said.
Retail rents are projected to drop 9.7 percent amid government-ordered shutdowns of non-essential businesses and lingering social distancing measures.
“Store closures have made it difficult for retail tenants to pay rent, which has negatively impacted landlords. It is not yet clear how effective government support will be in this sector,” Victor Calanog, head of CRE Economics at Moody’s Analytics, said in a statement.
Moody’s estimates that retail rents will drop 11 percent nationwide in 2020, nearly double the total decline during the Great Recession between 2008 and 2011.
Multifamily and industrial properties are expected to remain more resilient in the near term, but apartment rents in Greater Boston still are projected to decline 4.1 percent and both warehouse/distribution and flex/R&D property rents will drop more than 7 percent, Moody’s Analytics REIS said.
