It’s the headline-making, conversation-dominating, all-encompassing workplace issue of the ages: the return to the office. In this current phase of the pandemic, employers and employees alike are still figuring out what a workday should look like and how and where work should be conducted. The consequences of the sudden shift to remote work for commercial real estate cannot be overestimated, but signs of life are emerging for the office sector. In September, office use rates bounced back to their highest level since early 2020, with workplaces nearly half full across 10 U.S. cities. Of course, stats like these show just how far we have to go, but savvy employers have figured out how to mirror the flexibility and utility employees experienced working from home and are designing workplaces that meet evolving worker preferences, making the transition from home to office increasingly more attractive and effective.
Betting Big on Office Space
By the numbers: In Q2 of 2022, year-over-year office visits were up 85% in San Francisco, 54% in New York City, 38% in Chicago, and 31% in Boston, according to reporting by Placer.ai.
The work-from-home theme seems to be steadily fading in relevancy as corporations push their employees to return to office buildings, a crusade led by the big Wall Street banks like Goldman Sachs and Morgan Stanley, as well as — perhaps somewhat surprisingly — the tech industry. Amazon, Facebook, Apple, Amazon, and Google all scooped up commercial real estate in New York City after prices plummeted, due to the fallout from the pandemic.
Manhattan serves a compelling case study: In a groundbreaking bid to reimagine Midtown Manhattan, Gov. Kathy Hochul and New York State officials are pushing ahead with one of the boldest real estate development projects in U.S. history: 10 towers of predominantly office space located near Penn Station, the busiest transit center in the country.
Cashing in on Social Capital
The updated expectations of employees is driving another type of workplace demand: the quality of the spaces in which we work. Organizations may not need the same amount of space in today’s marketplace, but rather a certain type of space that will attract workers back.
In Europe, Grade A leasing accounts for almost 10% more of total leasing volumes when compared with pre-pandemic levels, according to new data from JLL. .
Office space that aligns with company sustainability targets, that supports the physical and mental health and wellbeing of their staff, or supports the digital infrastructure, are now in high demand. Providing amenities and unique experiences that draw people back to the office are key factors.
Making headlines amidst all this hubbub are the flashy perks many organizations are offering to lure employees back to the office. While concerts and happy hours are always popular, the trend is now leaning towards enhanced health and wellness as employee priorities shifted during the pandemic. Healthy meal offerings, gym facilities, and childcare centers are appealing benefits for employees looking to achieve more work-life balance.
In that spirit of improved wellbeing, the #1 reason employees will ultimately want to return to the office? The chance to be together again after more than two years spent working solo. In fact, as many as 93% of people believe that a sense of belonging drives organizational performance (Deloitte 2020 Human Capital Trends). The future of office space will require a design that encourages reconnection, community, and inclusivity. The most successful office spaces will be ones that fully embrace the collaborative environment that corporate America is gravitating toward. Meeting the Moment
The time may be ripe for commercial real estate investors, developers, owners, and managers to make the leap into office space as society emerges from almost three years of historic workforce disruption.
Harnessing Capital Connect's agile and adaptable platform is your first step to navigating this unprecedented time of opportunity. Our real estate marketing solution provides you access to an unparalleled database of real estate investment companies, private equity firms, REITS, and commercial and residential lenders so you can raise capital faster and more efficiently. Capital Connect also offers email marketing, analytics, client relationship management and lead management to help support all of your investment initiatives.