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A version of this article first appeared in the CNBC Property Play newsletter with Diana Olick. Property Play covers new and evolving opportunities for the real estate investor, from individuals to venture capitalists, private equity funds, family offices, institutional investors and large public companies. Sign up to receive future editions, straight to your inbox.
In the past year, U.S. companies made more progress in getting employees back to the office than at any time since 2020, when the pandemic fundamentally changed the traditional work paradigm. This is according to a forthcoming report from CBRE, due out next week. While some employers have gone fully remote and some offer hybrid work opportunities, the push is on to get more workers back to the office.
Nearly three quarters of the 184 companies surveyed by CBRE said they have met their attendance goals, up from 61% last year. The share of companies monitoring attendance jumped to 69% this year from 45% last year, and those enforcing attendance policies rose to 37% from 17%. Companies in the survey said they want employees in the office an average of 3.2 days a week. Actual attendance, however, is slightly below that.
“I think it was pretty loosey goosey for the last year or two, and I think the companies have got a lot better at that right now,” said Manish Kashyap, CBRE’s global president of leasing. “They’re coming up with policies that allow hybrid structures and allow flexibility, but whatever their new policy is, their implementation around that, and the governance around that, is definitely a lot better.”
More companies said they expect to expand their office footprints, rather than contract, according to the survey. Over the past several years there has been a huge slowdown in office development and a surge in conversions to residential.
The majority of survey respondents, 67% of companies, said they will either keep their office footprints at the same size or expand them within the next three years, up from 64% a year ago. For expansion, most pointed to business or headcount growth. About a third said they will reduce their space, down from 36% last year and 53% in 2023.
Concerns about the economy and tariffs do have some companies hesitating to make long-term decisions, but even with that concern, more are taking on long-term leases than were a year ago, CBRE found.
“You have organizations that finally have clarity and decision making, because they’ve been living in this world of hybrid for so long, and now they know what it truly looks like for them, so all those decisions that they may have put off, even if there’s a little bit of economic uncertainty right now, they’re still willing to move forward with some additional deals,” said Julie Whelan, CBRE’s global head of occupier research.
Despite the fact that overall office vacancies are at 18.9%, just under the 30-year high of 19%, nearly half of the companies surveyed said they were concerned about the availability of high-quality office space over the next three years. That concern is most significant when it comes to prime space, which accounts for only 8% of the total office inventory and has much lower vacancy rate than the rest of the market.
“For many, office footprints now are smaller but more effective and better tailored for collaborative work. Employers are much more focused now than they were pre-pandemic on quality of workplace experience, the efficiency of seat sharing and the vibrancy of the districts in which they’re located,” said Whelan.
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