It seems since the beginning of the Covid pandemic, “return to work” has been on everyone’s mind. Should we go back to work? When should we consider returning to the office? How should we plan for the return? Is a hybrid option better?
While many employers would say that they have implemented a return to work strategy, the truth is that we still aren’t where we were pre-pandemic. Let’s take a closer look at the current state of the office sector as we ask the question, “Are we really back at work?”
Unprecedented Vacancies
While you often hear that employees are back at work, the truth is that office vacancy rates throughout the United States were at a record high of 19.1 percent in 2022, according to CRE industry leader JLL. In the first quarter of 2023, FD Intelligence reports that this number is still high, standing at 18.6 percent — nearly 5 percentage points higher than the Q4 2019 (Source: Cushman & Wakefield).
What does this mean? While it’s true that more workers are back at their desks today than this time last year, attendance in office buildings — especially in larger cities such as Atlanta, Boston, New York, and San Francisco — are still falling far behind pre-pandemic numbers.
What’s in Store for the Office Sector
With such historic vacancy rates, it’s natural to wonder what the future holds for the office sector, as these massive buildings (that are mostly vacant) come up for lease renewals. As leases come up for renewal, these companies are often choosing smaller spaces that better fit their current needs, leaving owners and landlords with literally millions of square feet in vacant space.
Couple this with rising interest rates and market uncertainty, and it’s no surprise that many investors seem to think that the office sector is in store for a serious slump. “We see lots of tenants not renewing their leases, going either fully remote, or renewing their leases but signing up for less space,” said Stijn Van Nieuwerburgh, a professor specializing in real estate at Columbia Business School. “It all adds up.”
The key takeaway? Smart owners and landlords, who listen to and take into account their tenants’ needs, will continue to see success in the sector. It is crucial to look at current and upcoming trends, and to align your space accordingly.
Future of Work Trends for 2023 — and Beyond
A recent Harvard Business Review article outlined these 9 trends that will shape work in 2023 and beyond:
- Employers will “quiet hire” in-demand talent.
- Hybrid flexibility will reach the front lines.
- Managers will find themselves sandwiched between leader and employee expectations.
- The pursuit of nontraditional candidates will expand talent pipelines.
- Healing pandemic trauma will open the path to sustainable performance.
- Organizations will drive DEI forward amid growing pushback.
- Getting personal with employee support will create new data risks.
- Concerns around AI Bias will lead to more transparency in recruiting technology.
- Organizations must address workforce-wide erosion of social skills.
Rather than mandating their employees back to an in-person work environment, organizations should keep these trends in mind as they work to build intentional and purposeful connections among their employees, crossing multiple demographics and boundaries.
A 2022 Gartner study of approximately 3,500 employees revealed that when an organization helps their employees build connections, these employees were 5 times as likely to be on a high-performing team, and 12 times as likely to report feeling connected to their colleagues. Choosing the right platforms and software for your team can help build and foster connections.
RealNex is a CRM tool that can be used by commercial real estate professionals to work more efficiently and improve their productivity. At RealNex, we offer an incredibly powerful, yet amazingly simple, end-to-end solution. To learn more about RealNex and see samples of the products that we offer, visit our website. When you are ready to experience the RealNex difference for yourself, schedule a demo or contact us today — we’d love to talk with you!
