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Spring Office Utilization is Growing: What is the Future of Remote Work?

SPRING OFFICE UTILIZATION IS GROWING: WHAT IS THE FUTURE OF REMOTE WORK?
 April 26, 2023 |  Property Investment, Commercial Real Estate News |  real estate trends, commercial real estate tenants, office-space

In the beginning of Spring 2023, commercial real estate analysts like Businesswire reported massive increases in demand for office space. Nationally, there was a month-over-month increase from February to March of 31.3 percent, and key cities saw even higher numbers, such as San Francisco’s eye-popping 69 percent month-over-month increase.

Still, much of the conversation surrounding commercial real estate for office spaces is affected by the ambiguous future of remote, hybrid, and in-office standards. While some employers are making dramatic pushes to bring workers back into the office, many employees have adopted new standards for work flexibility that don’t align with these mandates.

To better understand the condition of office spaces, let’s take a closer look at the tug-of-war between hybrid workers and their employers.

What’s Happening to Office Spaces?
The massive drop in office space utilization is a well-known result of the coronavirus pandemic and the resulting lockdowns throughout the United States. Gradually, in-office work has been recovering, but for many, this recovery has been slower than desired. Business owners that have needed to accommodate hybrid workers have maintained their spending on large, modern office spaces and felt the burn from seeing the spaces unused.

As expected, the usual emergence from a long, inactive winter season has seen increased activity in office space deals. However, many workers who prefer remote or hybrid work are feeling the pressure to return to the office - a move that many view to be counterproductive.

Remote Workers, In-Office Workers, and Those Caught in the Middle
According to a report released by Forbes magazine, employers have become increasingly concerned with a drop in productivity from their hybrid and remote workers. While remote workers report being more productive thanks to their increased schedule flexibility and many studies seem to back up these claims, employers have become increasingly convinced that this isn’t the case.

Employees have cited the time gained by removing their commutes, and their new ability to optimize their output by working select hours where their focus is highest as reasons why their productivity has increased, but employers remain skeptical. Again according to Forbes, their “proximity bias,” or the bias formed when one must physically see the work accomplished by an employee, is a driving factor that has made many employers say a return to the office is a must.

The Shifting CRE Landscape
In a survey published by CBRE, a leading voice in commercial real estate, there has been a recent shift in preference when it comes to hybrid, remote, and full-time in-office work. They write that, “...45% of respondents support a mostly or fully office culture (vs. 37% in 2022), while 22% support a mostly or fully remote culture (vs. 15% in 2022).”

Preferences from a year ago have become more prevalent, and voices in the center are falling away. As a result, some businesses are feeling the need to either commit to a new normal of hybrid/remote work, or mandate their workers shift back into the office sooner rather than later.

Some large businesses with a little more capital and flexibility seem content to let their current lease agreements end in order to pursue newer, higher quality spaces that can attract the best talent. Meanwhile, smaller businesses that can’t afford to maintain an office presence while their workers are MIA are looking to commit to a full return or transition to a fully remote system.

The office space sector is in flux. At a time when there is plenty of uncertainty about where things will land in the CRE industry, these recent positive trends for the office sector have been received with a dose of cynicism. Owners and managers looking to get ahead of the trends would be best advised to accentuate modern styles, flexibility with space, and highlight the right amenities.

Property inspectors at NPI are the best commercial inspectors in the business. To find an experienced professional for your office space, connect with our National Accounts team today!