The fewer people working in the office, the less demand for office space?
This seems to be a logical conclusion. But a recent Harvard Business Review survey of 446 U.S. companies found that as companies permanently switched to mixed work, office hours fell by 30% or more, but office space demand fell by only 1.4%.
What’s going on? The HBr report identifies three factors driving this trend.
Office workers want more social distance when entering the office.
Since many employees prefer to stay at home on Monday and Friday, this means that a large number of people pour into the office in the middle of the week, which means that there is little opportunity to integrate office space.
Offices are being reprogrammed to accommodate office life in the pandemic and post pandemic era, which means more space to provide the amenities employees desire.
What experts mean is that employees don’t want a “hot desk”, although executives may prefer the concept to reduce office space. And high-density technology is outdated. “I don’t think people ever want to go back to high-density cubicle farms,” said Adam Chapman, a commercial real estate agent at JLL Seattle. “We now use 200 square feet of rentable area for every employee of a technology company, and 150 square feet or even less before the outbreak of COVID-19 is normal.”
Commercial real estate figures in Seattle *: even in 2021, office leases fell from the previous year and 46.9% from the previous pandemic.
Grade A office rents in Phuket Bay fell to $46.77 per square foot in the fourth quarter. But in the high-tech hotbed of downtown Bellevue, class a prices rose to $59.16 per square foot, while in downtown Seattle, class a prices fell slightly, just above $50 per square foot.
Technology companies remain blocked: with the proliferation of Omicron variants in the past few months, many large technology companies with thousands of employees in the Seattle area have delayed the return of their offices. Some companies, such as F5, icertis, remily and zillow, have turned to permanent hybrid work to provide maximum flexibility. Others postponed their return to school, while Amazon, Seattle’s largest technology company, said in October that it would allow individual team leaders to make phone calls where and when employees work.
We seem to be largely in our own world: technology is heavy, and COVID-19 is very cautious, first of all, very far away.
Even so, technology is still driving the office market in Seattle: technology companies have an insatiable demand for new employees and are driving the office market in Puget Bay. Meta, Amazon, Microsoft and a group of new life science companies continue to devour space. According to saves, technology companies accounted for 76% of major leasing transactions in the fourth quarter of 2021. JLL found that technology companies accounted for 51% of all leasing transactions in the quarter.
JLL pointed out in the real estate report in the fourth quarter: “as tenants in various industries were still stagnant before the pandemic began to subside, the position of the technology industry in pugeteffice offices continued to decline, of which 2021 signed several large leasing agreements.”
Is the Seattle market strange? With Portland and San Francisco, Seattle is in a bubble. “We seem to be very much in our own world: technology is heavy, very cautious and, first of all, very far away,” said Chapman of JLL. “We learned from other offices that more people are returning to the office.”