When it comes to choosing office space – either renewing, downsizing or seeking new — Jason Wurtz, executive vice president, office services, NAI Hiffman, tells GlobeSt.com that market activity is improving as companies can no longer delay their decisions.
“The clock is ticking, and short-term decisions can only be extended for so long,” he said. “Companies are becoming more confident with how they will operate going forward.
“With other natural expiration and “cans kicked” since 2020, there is some very minor pent-up demand appearing as growth compared to the low.
“Going forward, as more companies right-size, we will see activity in the market as companies decrease or increase their space, although it will be some time before we see positive net absorption.”
Region to Region and Building to Building
On the other hand, Giovanni “Gio” Cordoves, western regional president at KBS, tells GlobeSt.com that it’s difficult to paint a picture of return to office with too broad a brush because it varies so much from region to region and even building to building.
“It depends on the underlying tenants and users of specific space,” Cordoves said. “Nevertheless, overall return to office is steady and even rising in some markets with many Texas markets continually leading the country, according to Kastle data.
“However, in our office portfolio, we’re seeing a higher trend at our Southeast properties averaging 75% physical occupancy in September and even higher mid-week.
“Companies are increasingly recognizing the importance of having their teams on-site, and workers want to spend more time in the office than they did at the beginning of the pandemic.”
He said that in-office schedules promote collaboration and positive company culture and help facilitate training and mentorship for newer employees, which leads to higher productivity and success.”
Companies, Employees Eager to Complete Shift Back to Office
Jonathan Bennett, President of AmTrustRE, tells GlobeSt.com that the pandemic proved that it is viable for people to work from home, though it’s not optimal.
“For most employers, office space still remains critically important, and it’s no surprise that we’ve seen a steady uptick in demand (both tours and inquiries) from companies across the board, including big tech, e-commerce, legal, and government,” Bennett said.
“As we continue to progress toward normalcy in the wake of the pandemic, both companies and employees are eager to complete their shift back to the office.
“Right now, there is particularly strong demand for spaces that offer a better location and more extensive amenities. These better-positioned assets are likely experiencing the greatest jump in demand as they meet not only the space needs of companies and their leadership teams, but also the desires of employees.
“More and more people are looking to get out of their homes and into new spaces — not just for a change of scenery, but for the benefits of in-person collaboration and the productivity and creativity afforded by a professional, highly-amenitized office environment.
Early-Stage Companies Looking for Space
Newmark Vice Chairman Elizabeth Hart tells GlobeSt.com that the demand for space from promising, early-stage companies is increasing.
“While the demand for additional space from late-stage companies has plateaued, occupancy in their offices is trending upward, and we anticipate that this could lead to growing demand in 2023,” she said.
“R&D demand continues to increase, particularly for purpose-built space due to the unique needs of many prospective tenants.”