The future adoption of remote work methods by businesses casts a pall of uncertainty over the commercial office space industry. Has the rise in work-from-home jobs affected office space openings? And will it have a longer-term impact?
These are the questions CRE developers are asking since there is no real historical data to analyze as we navigate through uncharted territory. Working from home has affected office vacancy performance over time and across American metro areas. But seems to have leveled off and space utilization has even increased according to some reports.
Workers’ physical office utilization hit 43.6% in August 2022 (relative to 2019 pre-pandemic levels) according to Kastle System’s Workplace Occupancy Barometer, the highest on record since the U.S. Centers for Disease Control & Prevention confirmed the first COVID-19 case stateside two years ago.
Many companies started implementing their long-delayed “return-to-office” plans in the first quarter of 2022. This could account for the rise in physical office utilization. As more companies continue to implement programs, we expect the demand for CRE space to grow in the short term.
Longer-term Impact
According to numerous surveys and early results from the first post-COVID-19 work arrangements, it is likely that some employees will spend on average two fewer days at work, which could eventually form a ceiling at about 60% utilization with continued wide variation by office market, firm industry, and individual job type.
The adoption of new technologies including IP-phone systems, web meeting and cloud-based management software applications will allow remote workers to perform normal work-day duties without the need for physical office space. As workers become more accustomed to working from home, the physical utilization rate of office space could certainly be affected.
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