Office Outlook Brightens As More Businesses Require Employees To Return To In-Person Work

The U.S. office market is still reeling from the fallout of the global COVID-19 pandemic, but things could be looking up for the sector.

According to a CBRE survey of 207 companies with U.S. offices, 65% say they require their employees to show up at the office at least part of the time — more than double the respondents that required in-office attendance last year.

Because companies are taking a proactive approach to office attendance, 60% report reaching what CBRE terms as a “long-term steady state,” up from 43% last year. That’s prompting many companies to shrink their office footprints to match attendance patterns. 

Fifty-three percent of companies expect their office portfolios will get smaller over the next three years compared to 46% that anticipate no change or expansion. More than half — 58% — report renewing their leases even if it’s for less space, and 49% have allowed leases to expire. Another 32% are relocating to better-quality space, and 40% say they’re revisiting their existing lease terms now that they have more negotiating leverage.

“Real estate evolves to accommodate changes in human behavior, and we’re seeing that as the office market adapts to hybrid work,” said Manish Kashyap, global president of advisory and transaction services at CBRE. “This means greater flexibility in lease terms, more occupiers gravitating to higher quality office space and an increase in adaptive reuse of obsolete buildings. 

“Through it all, the office remains a cornerstone of employee engagement — our survey found that more than three-quarters of companies want employees in the office at least half the time.”

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 The survey also found that the commute is the leading influence on which buildings companies choose for their offices, with the top two amenities companies look for associated with getting to and from the office.

The most desirable amenities for office occupiers include access to public transportation, with 59% of companies prioritizing it; car parking with 54% prioritizing it; onsite café food and beverage at 53%; shared meeting space at 47%; sustainable building features and operations at 39% and fitness facilities at 34%. 

The largest industries in the U.S. — technology and finance and professional services — take different approaches to office attendance, with finance and professional services companies requiring employees to return to the office. In Denver, for example, businesses are responsible for 23% of all square footage leased in the city’s office market, compared to 15% for the technology sector.

“Overall, we found that top executives at finance companies are more focused on office attendance, especially amid economic uncertainty, than are their counterparts at tech companies,” said Julie Whelan, CBRE’s global head of occupier research. “Similarly, finance and professional services companies are more likely to encourage employees to spend most of their workdays at the office, while tech companies are more likely to allow mostly remote work.”

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