Occupiers Rethink Plans to Downsize Their Office Portfolios
That massive abandonment of onsite office space predicted at the height of the pandemic? Not going to happen. A new CBRE survey of 185 U.S.-based occupiers found that most have backed away from the idea of making big cuts to their office portfolios. Instead, many now plan for their offices to support collaborative work best done in person rather than remotely.
Sixty-one percent of survey respondents anticipate a return to a steady, relatively normal state of office use by the fourth quarter of this year, and 23% have already done so. Just 9% of larger companies surveyed expect to have “significantly smaller” office portfolios over the next three years, down from 39% who said this last September. Smaller companies are more likely to keep their portfolio the same or grow it over this timeframe.
“Multiple factors support this sentiment, including the ongoing rebound of the U.S. economy and companies’ realization that they need to retain more office space than they previously thought,” said Julie Whelan, CBRE global head of occupier research. “Many companies now recasting the design and function of their offices will find that the square footage needed to accommodate team-centric work, free-address seating and meeting space often exceeds that previously dedicated to rows of individual offices and cubicles.”
Although remote work will remain a fixture post-pandemic, most companies surveyed anticipate employees will spend at least half of their time in the office. Thirty-eight percent said workers will spend three or more days a week in the office; 32% anticipate an equal mix of in-office and remote work; 15% foresee solely in-office work; 7% say workers will do most if not all of their work remotely; and 7% haven’t decided yet.
CBRE’s Econometric Advisors projects that U.S. office-using workers now will spend an average of 1.8 days a week working remotely, up from 0.8 days a week prior to the pandemic. That will mean companies using 9% less office space per worker. However, the impact on office demand will be largely offset in coming years by increased hiring amid the economic recovery and evolving office floorplans that provide more room between workstations and ample space for group-centered work.
Additionally, CBRE Econometric Advisors forecasts that the U.S. office market will start its recovery in mid-2022 and asking rents will return to pre-crisis levels in early 2025. That’s a shorter timeframe than recoveries from previous economic upheavals, including the Global Financial Crisis and the 2001 dot-com bust.
In the Spring 2021 survey, companies reported they intend to use more flex-office space in their portfolios. Flex space tops the list of most desired in-building amenities by companies in the survey, with connected tech/building apps and indoor air quality also high on the list of priorities.
Paul Bubny serves as Senior Content Director for Connect Commercial Real Estate, a role to which he brings 13-plus years’ experience covering the commercial real estate industry and 30-plus years in business-to-business journalism. In this capacity, he oversees daily operations while also reporting on both local/regional markets and national trends, covering individual transactions across all property types as well as delving into broader subject matter. He produces 15-20 daily news stories per day and also works with the Connect team and clients to develop longer-form content, ranging from Q&As to thought-leadership pieces.
Prior to joining Connect, Paul was Managing Editor for both Real Estate Forum and GlobeSt.com at American Lawyer Media, where he oversaw operations at both publications while also producing daily news and feature-length articles. His tenure in B2B publishing stretches back into the print era, and he has served as Editor in Chief on four national trade publications.