It may seem like a no-brainer question as conversations still center around the work-from-home model. But new data makes us ask: Is commercial office space really being used less? The answer is no. Office space isn’t being used less, just differently.
Let’s look at the data.
What the Data Tells Us About Commercial Office Space Use
The shift to a hybrid-work model doesn’t mean your tenants want to vacate your buildings. In Harvard Business Review’s monthly survey of 5,000 American workers and 500 U.S. employers, analysts found the emerging norm is three days a week in the office and two at home. That cuts days on site by 30% or more.
So, you might think, “OK yes, commercial office space really is being used less.”
But not so fast. According to HBR, “You might think this cutback would bring a huge drop in the demand for office space. But our survey data suggests cuts in office space of 1% to 2%, on average, imply big reductions in density, not space.”
According to research from HqO, 48% of employers indicate that most or all their employees are already back in the office. Meanwhile, 40% indicate that some or few employees have returned to the office.
And a recent June 2022 report from Moody’s Analytics found the pandemic hasn’t had as great of a negative impact on the commercial office sector as did the Great Financial Crisis and previous real estate downturns. “The real revenue impact of the COVID-19 recession has been the least damaging of all the booms and busts the office sector has endured over the past 50 years,” the report states.
So, despite the remote work headlines, commercial real estate (CRE) investors don’t seem worried about the office sector.
So, Is Commercial Office Space REALLY Being Used Less?
So, is commercial office space really being used less? The data shows us it’s not being used less, just differently. Companies are shifting to a hybrid-work model. According to the HqO research, 68% of employers have redesigned their physical workspaces to support these new employee needs, while 28% plan to implement redesigned spaces in the next two years.
The way tenants and their employees approach commercial office space has completely changed. That means physical space needs to deliver new outcomes. The open floor plans of pre-COVID times may no longer cut it. Research shows that today’s employees want:
- Flexibility with tech resources and an in-office experience that makes the commute and time commitment worthwhile
- Configurable workspaces that accommodate a variety of activities
- Spaces, places, and policies that can flex based on the needs of the team at any specific point in time
As your tenants plan their back-to-office and hiring strategies, they’ll be looking to your buildings as a major piece of the puzzle. And how you fill your space will be critical. JLL research shows that by 2025, properties that incorporate a diverse roster of amenities will experience 12% higher demand from tenants versus their plain commodity counterparts.
How CRE Landlords Can Capitalize on the Changing Workplace
Change doesn’t need to be scary. CRE landlords can capitalize on these new trends. In fact, the changing workplace opens a wealth of opportunities for CRE landlords. And it’s all about the tenant experience (TeX).
You can partner with tenants to achieve their flexible work models. As more and more companies turn to hybrid work as a solution for changing employee expectations, it’s important to offer technology that bridges the gap between the physical office and the digital workplace.
You can implement digital tools that allow tenants to engage with you and their colleagues all in one place. Look for tools that allow you to create content and event programming and take advantage of out-of-the-box, pre-built tenant engagement programs. These tools can enable users to communicate updates, share details on local events, or request services through an easy-to-use mobile platform.
It’s also important to provide the amenities employees want so you can help your tenants attract and retain their talent. But you’ll need data to make informed decisions about what exactly your tenants want to ensure a return on your TeX investment. Here’s where tenant experience software and a building operations platform can help.
With this technology, you’ll have access to analytics that empower you to make data-driven decisions. That’s because every event registration, booked resource, and tenant survey sheds light on what your tenants love — and what they don’t. You can use this real-time data to remain proactive about your office programs and amenities.
Actionable Insights for CRE Landlords
If you’re a CRE landlord wondering whether commercial office space is really being used less, rest assured it’s just being used differently. And that’s not a bad thing. In fact, it opens new opportunities for you. Download our free guide “3 Ways CRE Landlords Can Capitalize on Today’s Changing Workplace” to learn actionable ways you can attract the highest quality tenants and win back the commute.