The Building Owners and Managers Association (BOMA), alongside investment and property management software company Yardi and research advisory service provider Brightline Strategies, recently released a three-part, nationwide study regarding the effect of the pandemic on tenants’ approach to their office space needs going forward.
The highlights presented in the final study relied on a series of fielded responses from more than 1,267 office decision-makers, including company owners, CEOs and other members of the C-Suite. The goal of the survey was to better understand the future financial and operational implications for commercial real estate owners and operators.
Nowadays, tenants are grappling with a changing business environment, as well as the need to improve employee satisfaction, which is quickly becoming a vital part of talent retention and management. As such, a reinvention of the office to accommodate evolving needs is on the horizon. Simply put, changing times require a flexible approach toward the office space of tomorrow.
Hybrid Work, Office Size & Occupancy Changes
Just more than half of those surveyed signaled that they were likely to reduce the size of their workspace, while some 36% were either planning to increase or maintain their office footprint. Among those looking to downsize, 67% pointed to the increasing popularity of remote or hybrid work as a major contributing factor.
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Notably, there were also some interesting regional variations in the perception of remote work. For instance, support for telework has increased significantly throughout the Northeast and in California, whereas numbers have gone down in the Southwest. The survey also revealed that smaller businesses tended to be less supportive of remote work than larger ones.
Likewise, the high cost of office spaces — coupled with the increasing costs of doing business — were also significant hurdles that many tenants reported facing when considering their workplace needs. As a result, tenants who were paying higher rents per square foot expressed their support for telework.
Regardless of any square footage adjustments, the pace of lease renewals throughout the summer of 2022 nearly matched pre-pandemic levels. In fact, a clear majority (72%) of respondents said they would be renewing their leases in the future, with the caveat that 54% would prefer a shortening of their agreements from seven to 10 years down to three to five years.
Reimagining the Office
Meanwhile, the most popular changes mentioned by respondents were those that sought to adapt the office to hybrid work patterns. These involved aspects such as the organization of professional development events; commuting incentives, such as stipends and parking reimbursements; as well as increased numbers of social events.
Many respondents were also interested in maintaining high standards in terms of sanitation and workplace safety. To that end, 76% of respondents said they supported hand sanitizer availability and continued disinfection of common spaces. Touchless elevators and air filtration systems also gathered significant support.
Two and a half years after the first COVID-19 lockdowns, the office market is finally getting more clarity regarding its future path: Clearly, going forward, rightsizing and catering to employees’ needs for flexibility will be just as important as creating safer, more inviting workspaces.
For more insights, read the full report here.
Last modified: October 17, 2022