In a good sign for the office market, more corporate occupiers are gaining clarity on long-term office portfolio strategies, according to a new survey by CBRE. More than 90 percent of office-using companies surveyed plan to expand or contract their portfolios because of the shift to hybrid work. CBRE’s Spring 2022 U.S Office Occupier Sentiment Survey includes responses from 185 companies of all sizes.
Thirty-nine percent of firms intend to expand due to business growth and hiring, while 52 percent said they’ll reduce office space over the next three years because of remote work and space efficiency. Just 9 percent of office-using companies say they’re standing pat, down from 27 percent a year ago, showing that companies are eager and more willing to make long-term decisions.
More than half of companies saying they plan to reduce office space may seem alarming to landlords. But it’s a significant change since the early days of the pandemic when about 84 percent of firms told CBRE they’d cut office footprints. CBRE’s survey also showed a growing acceptance of remote work. Seventy-three percent of respondents plan to incorporate hybrid work for their employees, up from 62 percent in 2021.
With COVID cases down and health restrictions loosened, workers are trickling back to offices, but occupancy still isn’t at pre-pandemic levels. Average weekday visitor volume at offices in major U.S. and Canadian cities is still down 58.5 percent compared to March 2, 2020, according to Avison Young’s Vitality Index (as of April 25th). The hybrid work model may mean offices will never be as full as they used to be, but CBRE’s survey still provides some encouragement for office landlords. Greater clarity about long-term planning for corporate occupiers could lead to better negotiations, longer lease terms, and perhaps less of the concessions that landlords have been giving.