Office users’ leasing decisions will continue to be driven by remote working, Los Angeles-based law firm Cox Castle & Nicholson says in its 2023 forecast for the office sector.  

“We also expect that those decisions will be affected by the availability of amenities for office workers as well as the types/locations of office buildings,” writes Cox Castle partner Andrew M. Ouvrier in the forecast. With return-to-office mandates not achieving the desired outcome, many tenants are turning to the carrot (i.e. amenities) rather than the stick (mandates) to incentivize employees.  

These considerations, along with a large market of office space available for sublease, “will tend to place downward pressure on rental rates and leasing activity in the office market in 2023,” Ouvrier writes. The result will be tenant-favorable market conditions. 

Cox Castle’s retail & commercial development group expects the greatest leasing activity in 2023 to be in newer Class A properties, flex space properties and medical office properties. “Given their more recent construction and modern design character qualities, newer Class A office buildings are simply more likely to be able to provide the amenities desired by today’s office workers,” writes Ouvrier. 

With tenants’ space needs often uncertain, the firm expects to see more office landlords partnering with experienced flex space providers this year. As for medical office space, the pandemic was only one of several factors leading to increasing demand, which is continuing to rise. 

For the complete report on the 2023 office outlook, click here.