The last couple of years have been transformational for the commercial real estate sector, particularly for the office market. Despite the uncertainty that marked the first half of 2020, fears around the demise of the office have been put to rest by the surge in workspace searches that surpassed even pre-pandemic levels. But while companies’ interest in renting office space has increased, so did the range of preferences landlords have to meet, as tenants demand more bang for their buck, increased safety measures and more natural light and outdoor areas for their office space.
As we found in our 2022 CommercialCafé office survey, “How Increased Renter Interest is Reshaping the Post-Pandemic Workspace,” despite the obvious disruption caused by the lockdowns to the commercial real estate sector, the numbers invite a much more encouraging outlook for the coming future.
For instance, following the mid-March drop in popularity in 2020, searches for “office space for rent” increased steadily throughout the remainder of that year. Even accounting for seasonal drops in November and December, the term followed a largely positive course, recording a net growth in popularity when compared to the period leading up to the onset of COVID-19.
Similarly, in the case of searches for “office space for sale,” we can see that this term had a significant surge in popularity in the first two months of 2020, compared to peaks recorded throughout the previous two years. Then, between March 2020 and September 2021, searches zigzagged consistent with the trend prior to the pandemic, before eventually taking off and settling on a higher plateau during the closing months of 2021 and first quarter of 2022.
While nearly a quarter said their search had been prompted by a need to downsize their office footprint, roughly 16% of those who completed the survey said they were looking for a larger office space. Once again, the data gives credence to the argument that remote working hasn’t made offices obsolete – as news of big companies either investing in prime real estate, renewing, or expanding their leases has continued to pour in.
Extended periods of lockdown and isolation have made many workers eager to escape the confines of an artificially lit office, sealed-off from the outside environment. Perhaps that’s why roughly 12% of survey participants highlighted the need for more natural light and generous outdoor areas as one of the main preferences they had developed following the pandemic.
As expected, COVID-19 safety measures (along with general sanitation practices) ranked high with roughly 19% of respondents. Meanwhile, 7% of people would like a subletting option to be included in their lease agreement to allow for maximum flexibility in the event of changes to their workforce or the company’s preferred work schedule in the future.
Interestingly, 23% of respondents indicated that they’d like to be the sole occupiers of a building. At the same time, co-working offices have also reemerged as a great alternative for businesses aiming to be nimble and ready to scale as needed.
Changing Preferences in Office Location and Needs
Are you considering a new location for commercial office space?
|Same city, close to downtown or central business district||45%|
|Same city, in the suburbs||29%|
|Different city, in the suburbs||17%|
|Different city, downtown or central business district||10%|
What has prompted your current office search?
|Downsizing and need a smaller office||24%|
|Getting a better price per square foot||23%|
|Looking to be sole occupier of a building||23%|
|Considering a larger office space||16%|
|Browsing for an upgrade in quality||14%|
What work schedule would your office space accommodate?
|Full return to office||43%|
|Hybrid, a few days per week in the office||20%|
|Mostly in the office, with a few days per week from home||18%|
|Mostly in the office, with a few days per month from home||13%|
|Hybrid, a few days per month in the office||7%|
For the study, researchers surveyed 1,242 visitors to CommercialCafé and sister company websites (PropertyShark, Point2, CommercialSearch and 42Floors) about the driving motivators behind their current office space searches, looked at Google Trends data to analyze changes in the popularity of key search terms for the office sector between March 2018 to May 2022, and contacted various real estate professionals to get their insights on emerging market trends.
Diana Sabau has years of intense research on the U.S. commercial real estate market at Yardi Matrix and writes several Yardi blogs, covering CRE investment, job market trends and tech. Her work has been featured in The New York Times, GlobeSt, The Real Deal, NAIOP, MSN and Bisnow.
CommercialCafé is a leading commercial real estate information services provider offering a suite of products and services tailored to the national and local needs of the commercial investments industry. Listings available on CommercialCafé include all commercial real estate property categories from office space for rent and co-working to industrial and warehouse space to retail.
Did You Know: In CommercialCafé’s 2022 office space report, most businesses actively searching for a new workspace were aiming for either a full return to the office (43%) or a hybrid system that requires employees to spend most of their time in the office (31%). However, even among those actively searching for listings, 27% claim to be looking for a space that can accommodate staff that will be mostly working from home. commercialcafe.com