Office occupiers have rapidly shifted towards remote and hybrid work arrangements after the onset of the pandemic, sending vacancy rates to all-time high levels across the U.S. Remote work, or work from home, has dominated the workspace landscape for the past two years, but many organizations are now making a move towards bringing employees back to the office, an adjustment that must take into account changing workforce expectations. Those working remotely have enjoyed no commute times, a flexible work schedule, extended family time and a more comfortable environment among other work from home benefits.
Flexible workspace solutions have been getting a lot of attention as corporate America adapts to employee requests for hybrid work. Organizations across the country are reconsidering their office space needs while trying to provide their employees with a traditional workspace that fosters collaboration and empowers productivity.
To better understand occupiers’ needs, we conducted a survey among prospective office tenants addressing the issues of office space footprint, how companies are adjusting to flexible work and the reasons why business leaders are looking into coworking spaces as a replacement for traditional office leases.
This article is based on a 5-question survey posted on CommercialCafe.com and PropertyShark.com, both Yardi-owned websites, with 1,118 respondents across the United States. For more details, see the full Methodology section at the end of this article.
39% of Occupiers Currently Using or Looking into Coworking
According to a Yardi Matrix Coworking Report, the total supply of coworking spaces was less than 2% in 2019, but it is rapidly growing as new business models emerge. Post-pandemic, many companies are forced to shift workplace strategies to embrace the flexibility demanded by employees that were hesitant to return to the office and give up remote work. Hybrid work became an appealing solution that provided employees with the ability to choose when they want to work from an office and when to work remotely. With this in mind, it’s no surprise that 39% of the respondents to our survey indicated that they either already have a coworking subscription or are considering flex office options in the future.
This shift in demand towards flexible work arrangements demonstrates the evolving role of the office and how it is meeting new occupier needs. Flex office spaces are a great solution for meeting occupiers’ demand for flexibility, cost reduction and space optimization, as well as employees’ expectations for choosing when to spend time in office.
Cost Savings and Flexibility Drive Interest in Coworking
When asked to pick the top three reasons why they are choosing a flexible workspace, most of the answers (24%) are pointing towards cost savings. Next on the list of priorities (17%) is the flexibility to increase or decrease the office footprint as needed. Short-term lease availability, preferred by 10% of respondents, comes in third on the list of reasons why companies are looking into coworking options.
This is in line with data from previous surveys from CBRE, that show a fundamental shift in the corporate real estate industry towards flex offices driven by the adoption of hybrid work and the need to upsize or downsize office footprints as needed. As Brian Sutherland, vice president of sales at Yardi, mentioned in a GWA webinar, “Turnkey offices, with everything corporate occupiers need for a properly functioning space, have long been the traditional solution and while this is still the preferred option, flexibility is key. Coworking provides the best of both worlds.” Additional factors contributing to the interest in coworking spaces include the ability to facilitate a hybrid work model (8%) and access to a larger talent pool as there is no recruiting limitation based on location (7%).
Offices Remain Fundamental: Majority of Footprints Static or Increasing
Office space footprint was a source of much debate as the pandemic caused an exodus of workers from offices in 2020 and many workplaces were left empty as remote work took over. However, with the push towards returning to the office, employees readjusted to a hybrid work dynamic, giving offices a purpose once again. When we asked how our respondents how their space requirements would change in the next three years, a majority 56% indicated that their office footprint would not change.
Another 35% indicated that they plan on increasing their office space footprint, which means that they would require even more space to accommodate their employees. Finally, only 9% of respondents indicated that they plan on downsizing their footprint, making their offices smaller.
Business leaders show optimism for in-office work, as 91% of respondents say that their office footprint will either stay the same or increase in the near future. Factors such as current lease terms, occupancy rates and new lease proposals are influencing space-related decisions, but with growing interest towards coworking and flexible options, the role of the office as we know it is likely to change.
Two-Thirds Embrace Hybrid Work
There is a growing consensus among employers that employees better value time spent in-office when given more autonomy around the amount of work they do outside the office. Our survey shows that companies’ desires to foster an office culture that meets employees’ expectations for flexible work schedules remains strong. Almost half of respondents (47%) indicated they would require no in-office attendance or, at most, 2 days per week for their teams.
Looking at overall responses, the percentage of companies planning to return to the office full-time and those planning to work fully remote is almost the same, 34% and 35%, respectively. This means that the return plans for companies differ, and each company’s needs are important when considering the ideal office solution and work dynamic. Another 12% of companies are leaning towards some of the time (1-2 days) and 19% towards most of the time (3-4 days) in office.
For many industries, traditional office spaces continue to be the best office solution, as 61% of respondents indicated that they don’t plan on using flexible workspaces. This, however, doesn’t mean that they wouldn’t implement flexible working policies, but that they believe having an office space used only by company employees, as opposed to a coworking or flexible office where they would share space and amenities with other occupiers, is a better solution.
As the world of office occupiers shifts towards hybrid work, the biggest opportunity and, possibly the biggest challenge, for business leaders is to reimagine the role of the office and create clarity on when and why their workforce should be in the office. Still, individual company needs vary, which is why evaluating all aspects related to the workspace is key to ensuring the best solution for supporting each company’s work dynamic.
Read more and check out the full report here.