Corrections occur, even in bull markets. On a purely probabilistic basis, fewer than 20% of the broader equity market corrections turn into a full-blown bear market, creating opportunities to capitalize on the bounce-back. Thus, the odds are for a temporary correction.
Technological advancements have given us the ability to work remotely, but it wasn’t until COVID-19 that society gained a general acceptance of this. We at AACA believe this (and a handful of other structural shifts) may create significant headwinds for office landlords for decades to come. While there may be relative winners and losers in this scenario, we hold that office valuations do not reflect the new reality for the sector – particularly in dense gateway markets like New York City.