Commercial Real Estate Trends: The Latest in Office
This article is part of a series covering recent commercial real estate trends by asset class.
2020 has been a year of change.
In fact, the changes have been so drastic and widespread that you rarely hear anyone utter the word normal without first adding the word new.
That’s been just as true for commercial real estate (CRE) as it’s been for our day-to-day lives.
In Part 2 of our series on CRE trends, we’ll cover how those changes have affected the office sector.
Office trends you need to know
The COVID-19 pandemic rocked the office sector … and according to a recent report from Cushman & Wakefield, the effects will likely last years.
In response to the dangers associated with working in a closed-air environment in close proximity to other workers, many companies moved to a work-from-home model.
Some companies plan to keep it that way.
In fact, Twitter announced they’re going to allow their entire workforce to work remotely on a permanent basis.
And according to a survey from Savills, more than half of tech tenants plan to reduce their office space in the next 18 months.
Fortunately, there are signs of recovery in the office sector.
A recent report from SIOR found 46.4% of office transactions completed on schedule in September, compared to just 22% in April.
So, how can commercial real estate brokers and leaders help their clients navigate this challenging market?
It comes down to understanding who wants to continue — or return to — working in offices and why.
According to JLL, 58% of office workers missed their office when working from home and 44% missed the social element working in an office brings.
But what company leadership and workers want in an office is changing.
REALTOR Magazine predicts we might soon see the end of open office space, instead seeing a resurgence in cubicles and other barriers that help prevent the spread of viruses.
CBRE, on the other hand, expects a rise in hybrid office spaces that merge physical and digital work environments.
“Workers likely will vote with their feet and choose places to work that offer new choices and spaces to cultivate their creativity, increase their productivity and most importantly improve their health and wellness,” they wrote.
Some of the ways they expect this to play out include:
- Less dense headquarters
- Conference rooms designed to engage both in-person and remote workers.
- An increased use of mobile apps that keep workers connected to each other and their office environment.
At Cushman & Wakefield, leaders are working on a concept called the 6 Feet Office.
It consists of six elements, shown in the graphic below.
- The COVID-19 pandemic’s effects on the office sector will last years.
- While some companies are shedding office space or moving to fully remote work models, many workers report missing the social element of working in an office.
- Open offices that maximize the use of space by keeping workers in close proximity are falling out of favor.