Office Market Opportunities in the Hybrid Workplace Model

August 2, 2021 Don Catalano Don Catalano

If there were one definitive silver lining of the pandemic, it has to be the universal adoption of remote work. Already a trending practice in select industries, telecommuting became the new normal overnight, thanks to the stay-at-home and social distancing orders. Over 50% of U.S. employees reported working from home 3 or more days a week during the pandemic.

 

Now that vaccinations are well underway and the country has begun to reopen, companies are working on defining a workplace model for the new way of life. The pandemic proved that we have the connectivity, tools, skills, and discipline to continue being productive from home, while also enjoying commute-free days, relaxed attire, and spending more time with family and pets.

 

On the other hand, collaboration and social camaraderie were negatively impacted by the lack of in-person interactions. While 100% remote work is certainly here to stay, a new hybrid workplace model, incorporating the best of both worlds, is shaping up to be the standard. Employees will have the flexibility to work from home, go to the main CBD office, or utilize other satellite office settings.

 

What does this mean for the office market?

 

The office market took a hard blow in 2020, and central business district and urban offices in particular, will continue experiencing the lingering effects of the pandemic-driven exodus. Suburban office properties, on the other hand, can see an uptick in activity as a result of the new hybrid way of work.

 

Satellite Locations

Companies are expected to downsize their CBD headquarters, but to open multiple small satellite offices in suburban markets. This hub & spoke model will allow remote employees the opportunity to attend face-to-face meetings, use company resources, or even work part-time out of an office most convenient to their current location. Properties with park-like amenities such as nature pathways, gazebos, and water features are expected to fare especially well in the post-pandemic climate.

 

Co-Working Centers

The hybrid workplace model is also predicted to revive the co-working space submarket. In its recent North America Flexible Office Market report, CBRE indicates that 86% of its survey respondents intend to utilize flexible space. Rather than signing long-term leases at multiple locations, some companies may choose to offer remote employees the option to work or conduct meetings out of existing co-working centers.

 

The surge in demand for co-working facilities is also fueled by a whole new cohort of pandemic-born entrepreneurs and freelancers, who may be too small to lease a traditional office but need a professional environment for meetings or distraction-free work.

 

Enterprise Flex Space

Landlords, who are looking for creative ways to profit from the hybrid workplace trends, are also starting to offer owner-operated flex space. Combining the most attractive aspects of traditional and co-work leasing, enterprise flex deals come with shorter terms than traditional leases, while offering lower rental rates, higher security, and more customized amenities and services than co-working centers.

 

If you need to rethink your office space strategy for the post-pandemic world, you should contact one of our experienced tenant representatives, who can help you with existing space disposition, new lease negotiations, and everything in-between.

 

Here are a few other articles we think you'll enjoy:

The 3 R's of CRE - Part 1: Right-Size

The 3 R's of CRE - Part 2: Renegotiate

The 3 R's of CRE - Part 3: Relocate

 

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