If everyone works from home, why is commercial office space flourishing? | Gene Marks

Mall people loved working from home during the pandemic. They had to spend more time with their families, adopt more pets, enjoy the magic of delivery services, drink Netflix, change their sweat suits and even start an unprecedented number of businesses. All of these reasons – and many others – are behind why so many workers want to keep doing the same, even as we try to put Covid in the rearview mirror.

For those employees, here’s a warning: prepare for reality. Employers plan to get you back to the office.

Why else would Facebook lease another 300,000 square feet of New York office space to add to the already occupied 3 square feet? Why would Google spend $ 2.1 billion on an office building in Manhattan and expand its “spacious campus” in the city to accommodate its more than 12,000 employees? These are technology companies with cloud-based businesses… then why expand offices?

And why would the commercial real estate market in Manhattan “recover” with CRBE, which monitors such things, reporting that leasing activity has increased 100% over the previous year since March 31? “We just reached 95% occupancy, the highest occupancy rate in the building’s history,” said one New York landlord.

This is not just a New York thing.

In Charleston, South Carolina, vacancy rates are below 2% and nearly 10 million square feet of industrial space is under construction. In Jacksonville, Florida, 2021 was a “great year” for commercial real estate investors, with all sorts of products announcing an increase in market rent, occupancy and customer interest. Commercial real estate in northwest Arkansas has the lowest vacancy rate since 2005. In Philadelphia, Baltimore, Santa Clara and Chicago, there is a “boom” of mixed-use commercial and residential real estate developing after the pandemic. Developers in Iowa say industrial spaces “can’t be built fast enough”. Vacancies for office space continue to decline in San Diego, Los Angeles and Orange County, California.

If everyone is “working from home” – as we hear again in the media – why is the commercial office space market booming? Yes, there is a greater demand for storage thanks to all these Amazon orders. But it’s also about something else: not everyone will be working from home in the coming months. They return to the office.

Of course, large companies are still slow to reclaim their employees. Larger organizations from Goldman Sachs to KPMG – concerned about poor public relations and potential lawsuits – are tentatively allowing employees to determine their own arrangements. But this is changing fast. More than half of corporate leaders want their people back in the office five days a week, according to a new study from Microsoft. Even members of GenZ have a negative view of telecommuting!

So will these workers come back? He will have no choice.

We know that many employees are reluctant to return to the office. Just last week, a study found that more than half of Apple’s workforce would want to quit because they prefer to work from home. Other studies – like this and this one – have shown that the vast majority of workers prefer to continue working from their homes instead of traveling to work. Who can blame them?

But as much as employees want to work from home all the time, it just won’t happen. The reality is that workers in the country’s small businesses – which employ about half of our workforce – have been back in the office for some time. When I visit my clients – who are almost all small to medium-sized companies – their employees are at their desks. If you don’t believe me, take a ride on the outskirts of your city and check out the parking lots.

There is no doubt that working-from-home agreements are now a key advantage that companies must provide. My best clients rethink their work culture and do their best to offer their employees as much flexibility as possible. But there will be a limit. I don’t know of one that goes completely virtual and very, very few that allows its employees to work remotely more than two days a week.

This is because employers know that the right job can be done when teams can be together, face to face, collaborate, innovate and yes, even socialize. They also know that working from home can be difficult for some, cause loneliness and depression in others, and also provide an opportunity to avoid the job they are actually paid for instead of conducting their backing performances.

Work from home is here to stay. But – judging by what we see in commercial real estate – companies are expanding rather than leaving their offices. Many employers are doing their best to help transition their employees back. But in the end, this is a job. And the work is done in the workplace, which means that coming to the office – at least most of the time – is a reality that workers will have to face.

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