What many supposed might happen, it turns out, did — commercial occupancy rates dropped a great deal in the fourth quarter of 2020, analysis by the Texas A&M Real Estate Center revealed.
In Dallas-Fort Worth, office occupancy rates dropped by as much as 79%, while retail space found the biggest drop at nearly 93%.
But it wasn’t just occupancy rates that suffered from the pandemic, which ended the longest period of economic expansion in the state’s history. Global shutdowns factored into a sharp downtick in almost every sector.
“Conditions improved as factories reopened with social distancing and mask-wearing mandates,” the report explained. “Cautious public and consumer sentiment had a greater impact on oil demand and the leisure/hospitality sector via extremely reduced business and pleasure travel, dining at restaurants, and trips to museums and other contact-intensive recreational businesses.”
Unemployment also impacted commercial occupancy. The state shed roughly 3.4% percent of payrolls last year, the biggest decline since 1945.
“Moreover, Texas’ labor force participation rate ticked down to an all-time low of 62.7% as more than 81,500 Texans exited the labor force amid pandemic-related disruptions and uncertainty,” the report said, adding that women in the 25-34 year age group were most likely to leave the workforce so that they could take care of children after school closures.
But there may be good news ahead. Layoffs would have been worse without stimulus designed to buoy small businesses and protect payrolls.
“The nature of the pandemic-induced recession this year, however, suggests a silver lining,” the report said. “If the virus is contained through vaccinations, immunity, and continued measures to prevent the spread of the disease (e.g., social distancing, mask wearing), economic activity and mobility may recover to pre-pandemic levels in the short-term.”
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