What to Expect from the Office Market This Calendar Year
After the pandemic forced the US workforce to test out remote working capabilities throughout 2020 and early 2021, last year started the return to business as usual. By the end of 2021, approximately 40% of workers had returned to the office.
However, a total return to in-office work hasn’t yet occurred, prompting many business professionals to wonder if the relative success of remote work has made office buildings a thing of the past.
Data collected on remote offerings in 2022 state that only 16% of US companies hire remote workers exclusively. Another 62% of US workers operate in a hybrid environment (part-time at the office and part-time remote), while an estimated 44% of US companies don’t offer any remote opportunities.
Because only a small percentage of companies either started remote or will remain 100% remote, it’s clear that office buildings will still be a popular market in 2022.
Recovery in 2022?
According to industry experts at Globest, the office market is predicted to continue its slow and steady recovery throughout this calendar year. The slow uptick started last year when wide-scale vaccination allowed employees to begin returning to their office jobs amid a long-term restructuring of workplace operations.
The same behavior is likely to continue as 2022 proceeds, with more and more employees returning to the previous definition of normalcy and commuting to office work.
Office Market Demands
Experts predict that the recovery of commercial real estate will be quite slow. As such, business owners and building developers are somewhat unsure how much office space will be needed in light of the new hybrid work model.
The demand for office buildings will likely remain at a 20-25% decline compared to previous numbers. This number may be due to many office buildings only being 40% occupied at any given time as workers come and go between in-office days and remote workdays.
The recovery is expected to continue, but the demand for office space may remain lower than the norm pre-pandemic.
Despite the predicted decline of typical commercial market trends and the slow recovery of the office market, the nearly record-high prices of commercial buildings will likely remain where they are. Increased interest rates and borrowing costs have still not led to commercial properties dropping by more than 5%, though 1-2% dips are relatively regular.
In short, it’s safe to expect a continued recovery of the office market. However, it will likely proceed slowly and may remain approximately 20% below past demand levels for the foreseeable future.