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KEY TAKEAWAYS
• The shale revolution has introduced a supply
dynamic that will likely result in a lower long-term
equilibrium price for oil.
• Baring a production freeze or unforeseen event,
oil prices are expected to remain below $60 per
barrel through 2017, and most forecast below $70
through 2020.
• The impact of a protracted low oil price scenario
is mixed: energy-producing regions struggle
while consumers and non-energy producing
markets benefit.
• Not all energy-producing markets are created equal.
While certain office markets, such as Moscow,
Aberdeen, Calgary, and Houston have faced
significant headwinds due to the oil shock, others
are holding up well, and some are even thriving.
• For occupiers, the prolonged oil price rebalancing
will create lease negotiation leverage and cost
saving opportunities in some markets, but rental
pressure in others.
• With oil prices remaining low, occupiers in many
markets will benefit from lower office build-out
costs and lower space energy costs.
• The window of opportunity will not remain open
for occupiers forever, however. Many energy cities
have strong long-term fundamentals, and the
energy sector will ultimately recover.