As we look forward to 2021 and beyond, there are more questions than answers surrounding the future of the office sector. Do tenants need more or less office space? Will employees want to return to the office? How often are corporations going to require staff to come into work? Can the challenges of remote working be overcome? What are temporary headwinds and what trends are here to stay for the long-term?
- Thus far, the U.S. office market remains relatively resilient throughout the pandemic, primarily due to the long-term nature of office leases and overall creditworthiness of corporate tenants benefitting from a resilient stock market and government stimulus.
- COVID-19 did not destroy the office sector, but there are challenges ahead.
- The abundance of sublease space will have a chilling effect on near-term rent growth.
- Should physical distancing protocols remain in place, tenants may need to keep their same footprint, even if part of the staff works from home some days.
- The case for returning to the office primarily stems from the desire to foster a company’s creativity, culture, career development, communication and collaboration, which will be difficult to accomplish in a work-from-home environment.
- Landlords and tenants’ management alike will need to adapt quickly to ensure they provide an environment where employees want to collaborate and can maximize efficiency. By providing employees with collaborative, safe environments, companies will be able to recognize the value of office expenditures.
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Office KPIs
Sources
1 CoStar, Lease Comps, March 2021
2 CoStar, Analytics, March 2021
3 PWC, Remote Work Survey, January 2021
4 Wall Street Journal, Netflix’s Reed Hastings Deems Remote Work ‘a Pure Negative’, September 2020
5 Society for Human Resource Management, Study Finds Productivity Not Deterred by Shift to Remote Work, September 2020
6 Cushman and Wakefield, The Edge Volume 5, February 2021
7 CoStar, Analytics, March 2021
8 CoStar, Analytics, December 2020
9 Bloomberg, Dimon Sees ‘Carrots and Sticks’ Approach to COVID Vaccines, March 2021
10 Stealing Fire by Jamie Wheal and Steven Kotler, published February 2017
11 Harvard Business Review, Create a Work Environment That Fosters Flow, October 2019
12 Lucidspark, How collaboration and creativity are suffering in the wake of COVID-19, September 2020
13 Business Insider, Google is allowing employees back on campus for outdoor-only meetings because remote isn’t always enough, December 2020
14 Harvard Business Review, When to Fire a Top Performer Who Hurts Your Company Culture, October 2012
15 Gallup, Remote Work: Is It a Virtual Threat to Your Culture, August 2020
16 PWC, Remote Work Survey, January 2021
17 Harvard Business Review, Remote Managers Are Having Trust Issues, July 2020
18 Lucidspark, How collaboration and creativity are suffering in the wake of COVID-19, September 2020
19 CBRE, Flexible Space Solutions, March 2021
20 The Guardian, UK office workers slower to return to their desk after COVID, August 2020
21 PWC, U.S. Remote Work Survey, March 2021
