Manulife faces 40% decline in U.S. office investments from peak

Manulife Financial Corp. is facing a divided global office market, with the value of its U.S. office investments having plummeted by as much as 40 per cent from a pre-pandemic peak, according to Chief Financial Officer Colin Simpson.

The North American market has been deeply impacted by the shift to remote work, with U.S. office vacancy rates surging to a record 19.7 per cent at the end of last year. This stands in contrast to Asia, where office buildings are relatively full, Simpson said in an interview.

“I like to think our property portfolio is of reasonably high quality and quite resilient, but the structural forces of higher interest rates and trends around return-to-office make it a difficult market,” he said.

The worst may be over for the downturn in office property values, said Simpson. But he warned that advancements in artificial intelligence may erode white-collar employment, stifling any potential rebound in demand for desks.