The office sector is facing an unprecedented imbalance in supply and demand leading to an excess of 330 million square feet of vacant space in the U.S. by the end of the decade. The imbalance is attributable to hybrid and remote work strategies, Cushman & Wakefield says in a new report.  

Demand for office product that can accommodate modern-era tenant preferences and provide a high-quality, strong in-person experience has shifted dramatically higher. Conversely, demand for mediocre, lower-quality, older non-sustainable/ESG-oriented, commodity office product has shifted dramatically lower. 

“The relationship between job growth and office demand has fractured,” said Kevin Thorpe, chief economist and head of global research at Cushman & Wakefield. “While elements of this relationship are likely to resolidify as the impact of remote working strategies on office demand stabilizes, the office sector is nevertheless facing a period of structural change that will pressure operating fundamentals and property income. The net result of these shifting demand dynamics and static supply dynamics is an accelerated divide between the office that works for today’s economy and the office that doesn’t work.”