Office Remote Work Verse Returning to Work
The commercial real estate industry is impacted by office remote work verse returning to work. There is no denying that the pandemic forced change upon modern-day working conditions. The shift has imposed remote, hybrid, or in-person strategies for employers to adapt which has some reevaluating how much office space is needed to successfully run a business.
New data from The Deseret News and Hinckley Institute of Politics show 57% of currently employed Utahns are back at their respective places of work while 43% remain in either remote work situations or some hybrid combination of in-person and remote.
Out of those people, 16% say they are doing their jobs entirely in a remote setting and 27% report they are in hybrid workplace situations.
Office Remote Work Verse Returning to Work
With the Omicron wave behind us, the future of office space is looking a little brighter. According to the 2022 Economic Report to The Governor of Utah, the construction of office and professional use buildings is back on track as it was pre-pandemic. This is also since all job sectors saw employment growth in 2021.
Regarding the construction of these office buildings, there is the issue of a slowed supply chain. There is also the inevitable hybrid work-environment issue changing up the office market. Now that companies know they can have their employees work from home the purpose of the office has changed. Rather than being just a place to work, it is also a cultural hub to build employee and company morale.
Numbers from Mountain West reflect the shift. Office vacancy rates in one of Mountain West’s largest markets peaked during the height of the pandemic but are indicating a slight drop at the beginning of Q1 2022.
Salt Lake County Vacancy Rate For Past Five Years
- The gap between Class A and Class C vacancy rates is widening.
- The vacancy for Class C has increased at a faster rate than for both B and C classes.
What Does an Office Need?
The function of the work office is changing due to the pandemic. After a year of being in and out of lockdowns companies have realized working from home is a viable option for their employees. However, a sense of work culture is still necessary to build interpersonal relationships and boost overall company morale. Therefore, office spaces should provide:
- More communal space for face-to-face interaction
- A modern feel that makes employees want to go into the office
- Utilities that support the latest technology for off-location contact
This means Class A office space is being sought out. With companies also needing less space due to hybrid work there will be more vacancies for the time being. However, as the pandemic begins to dwindle there will be an increase in return-to-office employees which may boost the size of future leases
Many brokers feel like they are defending their business against the threat of a changing office climate. At Mountain West, we recognize the opportunity to find a better way of working for everyone.
2022 Trends
- Brokers must respond to big corporate headquarters’ needs for more agile solutions that match the flexibility and speed they expect elsewhere in their business.
- Brokers should consider that long-term trends are going against the traditional office deal. Companies are looking to reduce the amount of space they lease per worker.
- Some data indicates, that workers do not like the traditional office – but they also don’t like working at home – It’s key to be able to offer them a midway house between the two, combining a short commute and easy accessibility.
- Mountain West says the future of brokering is selling workspace, not just offices. For example, offering flexible, scalable solutions as well as options for traditional long-term leases allows you to meet the needs of companies and their staff alike.
