Less Than 10% of Office Space Remains the Same Post-Pandemic

More than 90 percent of office-using companies intend to expand or contract their offices as part of post-pandemic and hybrid-based scheduling for their workers, according to CBRE’s Spring 2022 Occupier Sentiment Survey.

The survey includes responses from 185 companies of all sizes with offices in the US. Just 9 percent are standing pat, down from 27 percent one year earlier.

It’s 39 percent that intend to expand, mostly due to business growth and hiring and 52 percent that said they will reduce space over the next three years – mostly due to remote work and space efficiency.

This is the latest data point illustrating that office is in a state of flux. GlobeSt queried several experts about these new stats to see what they think it means for the category’s direction. 

Hybrid Work Here to Stay

Alexander Snyder, Portfolio Manager at CenterSquare Investment Management, tells GlobeSt that “it’s pretty clear that hybrid work is here to stay. Stadiums and restaurants are filled but offices aren’t. It’s a preference and it’s a Lindy Effect – the longer we go without going to the office full time, the more likely it is to stick. 

“And to be clear, it’s not that the employees don’t want to work, it’s that they like working from a lot of different places. The most sought-after office space these days is very flexible, with lots of meeting space and places to gather, because in a hybrid world the most important thing you can do in an office isn’t on a keyboard, it’s simply to be present with other humans to build culture, learn and forge relationships.”

Snyder said the most in-demand offices today have a lot of outdoor space, paired with cozy gathering spaces inside, allowing workers to move seamlessly between worlds. 

Investing in Office Features

Rich Gottlieb, president, and COO, Keystone Development and Investment, tells GlobeSt that the future of the office is entirely focused on the level of service that property owners can provide. 

“The key to a successful workforce in a hybrid/post covid environment is to provide amenities that enrich people’s workdays on a daily basis,” Gottlieb said. “Smart property owners will invest in building features that make its tenants feel comfortable and will use technology, sustainability, and adaptive reuse to create new ways to keep everyone connected in the commercial buildings of the future.”

He said this can be achieved through bi-polar ionization air systems, flexible designs such as multi-functional office courtyards, and contactless elevators, among other things.

In terms of technological connectivity, automation and digitization are leading the way, Gottlieb said. “Through connected, smart office buildings, developers are prioritizing tech and data to maximize infrastructure efficiency.”

Hybrid Models Meet Employees Somewhere In the Middle

Scott Helberg, real estate senior analyst with RSM US, tells GlobeSt that the office space landscape is currently in a stage of transition. 

“Some companies are pushing their employees to be back in the office five days a week, while others are pushing for a fully remote experience,” Helberg said. “Many companies will likely end up somewhere in the middle, utilizing a flexible hybrid work environment.”

In RSM’s Middle Market Business Index earlier this year, 68% of respondents employing a hybrid model said they have plans to retain permanent workspace. Furthermore, 64% of respondents are not planning to reduce the number of physical workspaces over the next two years and a quarter actually plan to expand their office space.

Balancing In-Office Time with Customer In-Person Meetings

Luis Flores, Partner at Saul Ewing Arnstein & Lehr, tells GlobeSt that after months of brainstorming and talking with staff and attorneys, his firm adopted a plan that encourages all attorneys and staff to be in the office every Wednesday and spend another four days a month with clients and colleagues in person.

“We consider this approach to be the best balance of both worlds and the response has been positive across the firm,” Flores said.

Chris Congdon, director of global research communications, Steelcase, tells GlobeSt that it’s not enough “to simply re-open the office doors and offer a hybrid work policy. Today’s office needs to earn the commute of employees. We’ve learned from those who have returned that their wants and needs have fundamentally shifted. The office needs to support the new ways people work while helping to create a sense of community where people belong and feel valued.”

Where the Hybrid Model Works Best

Kurt von Koch, CEO, FM:Systems, tells GlobeSt that he believes a hybrid approach to occupying office space is a key part of how many employers are adapting and refocusing the workplace to better enable their organization‘s mission.

“For corporations and government agencies, it is about adapting the workplace to create collaboration, ideation, and culture building; for universities, it is about certification, research, and education; and for healthcare it is about improving patient outcomes and reducing patient costs,” von Koch said. 

Brian Haines, chief strategy officer, FM:Systems, tells GlobeSt that more than 86% of his top customers are looking to reopen their offices – largely under the hybrid model.

Haines said they tell him that their biggest challenges with employees coming back included successfully implementing flexible work arrangements, providing an ideal employee experience, right-fitting or reconfiguring their real estate, and understanding workplace utilization. 

“Real estate has always been the second largest cost center to labor costs for a company. However, as more companies adopt hybrid work, it is becoming very apparent that 2022 is a critical year for organizations to double down on understanding how, when and where they can make better use of their office space,” Haines said.

Aruna Ravichandran, SVP & CMO, Webex by Cisco, tells GlobeSt that as people return to office, expectations have changed. 

“Organizations are reconsidering the physical footprint – with those planning for a hybrid strategy 4.5 times more likely to expect a reduction in space of greater than 10%,” Ravichandran said. “Hot-desking is not a new concept – people and companies have shared workspaces for years. But we believe hot desking should be more than a space to work for the day – it should become your personal office – and it needs to deliver an experience that’s the same or better than people had at home.”

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