Vacancy rates at record levels in the US confirm that office tenants have preferred remote and hybrid working arrangements since the beginning of the pandemic. Recent data from the Census Bureau shows that the number of people working from home tripled in 2021 compared to 2019, as companies massively adopted remote working. Working from home has several advantages, including a shorter or no commute, a more flexible work schedule, more time to spend with family and a more comfortable work environment.
Since early 2022, more and more corporations have shifted to hybrid work schedules adapting to employee demands for remote work. As such, they are forced to rethink their office space needs by offering employees a traditional workspace to encourage and enhance their productivity. Coworking and flex spaces are a great alternative to the traditional office space setup for occupiers looking for flexibility and cost savings, as shown by a recent Yardi Kube survey.
The survey was conducted among 1,118 prospective office space tenants in June 2022 and addressed the occupiers’ needs in terms of office space footprint, the advantages of flex spaces and the adoption of hybrid work.
39% of Prospective Tenants Are Now Using or Considering Coworking
According to a Yardi Matrix Coworking Report, the overall supply of coworking spaces was less than 2% in 2019, but it is rapidly increasing as new business models develop. With the pandemic reaching an end, many companies have had to change their workplace strategies to meet the flexible work needs of employees who do not want to give up remote work and completely return to the office. The best solution was hybrid work, which allowed employees to manage their hours and choose when to work from home and when to work from the office. According to 39% of survey respondents, they already have a coworking subscription or are considering flexible office options in the future. Flex office spaces, coworking included, offer many benefits, such as flexibility for occupants, cost savings and space optimization. In addition, they give employees the power to choose how much time they want to spend in the office and when.
Saving Money and Flexibility Drive Coworking Interest
When it comes to the main reason why occupiers are interested in coworking options, 24% of the responses indicated cost savings. The second most popular reason was flexibility to increase or decrease office footprint as needed, with 17% of all responses. Short-term availability was the next factor mentioned by 10% of survey respondents. As stated in a CBRE survey, the office industry is significantly shifting towards flexible offices and responding to the demands of hybrid work. Along the same lines, Brian Sutherland, vice president of sales at Yardi, mentioned in a recent GWA webinar: “Turnkey offices, with everything corporate occupiers need for a properly functioning space, have long been the traditional solution and while this is still the preferred option, flexibility is key. Coworking provides the best of both worlds.”
Other factors of interest for coworking spaces mentioned in the survey include the ability to facilitate a hybrid work model (8%) and access to a larger talent pool because there are no recruiting limitations based on location (7%).
Offices Are Still Essential: Most Occupiers Believe Their Footprint Will Likely Increase or Stay the Same in the Near Future
Many offices remained empty in 2020 as remote working replaced office work. Nowadays, employees have embraced hybrid work more broadly. When asked which way their workspace requirements will change, 56% of respondents said their office footprint would not change, 35% said they want to increase the space where their employees will work and 9% said they plan to lower their footprint and make their offices smaller. Existing lease terms, occupancy rates and new lease proposals are all factors impacting this decision.
The Yardi Kube survey reveals that employees value their time in the office more when they are given autonomy over their workload outside the office. It also shows that companies are promoting an office culture that embraces the priorities of all employees, regardless of their place of work.
66% of Respondents Said They Embrace Hybrid Work
According to the Yardi Kube survey, companies are split between returning to full-time in-office work and fully remote: 34% and 35%, respectively. But most companies are evolving their schedules towards hybrid work, and this differs according to the needs and priorities of each company. Working dynamics vary from one employer to the next. Some 12% like to bring their employees to the office for 1-2 days, while 19% prefer to bring their employees for 3-4 days. For more information and data from the Yardi Kube survey, check out the full article here.