Overview
Quick Takeaways
- A six month growth streak in the office market was broken in July as the United States saw an increase in the Delta variant
- The VTS Office Demand Index (VODI) is 16% below its 2018-2019 level, though in a year-to-year comparison, it is up 282%, showing strong signs of recovery from 2020
- Though the Delta variant has shifted the market, experts do not believe that it will reach early pandemic levels – for now, the advice is not to panic.
Source: US Office Market Statistics, Trends & Outlook (JLL, Jul. 21, 2020)
The COVID-19 pandemic and the resulting work-from-home orders have greatly affected every facet of real estate, and many office buildings are taking on new lives. Both employers and developers have had to get creative, enticing people back to the office with improved safety precautions and luxury amenities. The recent uptick of the Delta variant has slowed the market back down after a hopeful looking spring and summer, but experts do not expect the market to slow to a 2020 level.
Co-working has also taken on a whole new life post-pandemic. Though many are not eager to share space with strangers, it has also provided dedicated work space in a year (almost two) when our homes became our offices, gyms, and schools. WeWork and four other co-working companies have just signed a contract with the federal government, the first of its kind.
See References for more information.
References
NAR Library & Archives has already done the research for you. References (formerly Field Guides) offer links to articles, eBooks, websites, statistics, and more to provide a comprehensive overview of perspectives. EBSCO articles (E) are available only to NAR members and require the member's nar.realtor login.
Office Property Trends
One Size Doesn’t Fit All: Employee’s Needs are Changing Work Spaces (The New York Times, Oct. 19, 2021)
John Harrison, design director of the Houston office of Gensler, the architectural firm, believes “the biggest shift in the post-pandemic workplace will be the radical change in flexibility. People’s behavioral habits are going to be different. The physical office must accommodate that in a forward-thinking, creative way,” he said. What will emerge will be “a blended work force where some people will work from home, some in the office on certain days,” he added. Eric Gannon, the workplace studio leader for Gensler’s Chicago office, warned: “If we don’t give them a reason to commute in, they’ll return to their basement to do their work.”
Pandemic’s Toll on NYC Office Market Will Last Years, State Says (Bloomberg, Oct. 7, 2021)
According to a report from the Office of The New York State Comptroller, “Covid-19 has reduced the market value of New York’s office buildings by nearly $28.6 billion and cost the city more than $850 million in property tax revenue for fiscal year 2022.” This was the first decline the city saw in this sector in 20 years.
NAR Unveils Top 10 Commercial Office Markets (RIS Media, Sep. 28, 2021)
At the inaugural C5 Summit held in late September, NAR announced the top 10 commercial real estate markets for 2021. The top office markets are as follows: Austin, Boise, Chattanooga, Daytona Beach, Miami, Myrtle Beach, Omaha, Palm Beach, Provo, and San Antonio.
New Demand for Office Space Slows Over Delta Variant Uncertainty (Globe St., Aug. 26, 2021)
“The Delta Variant infected demand in office space in July, as virtual and in-person tour volume dipped, according to the VTS Office Demand Index (VODI). The mark snapped a six-month streak of growth in new demand for office space.”
Co-Working Spaces
Global Co-Working Spaces Industry Report 2021-2025 with Profiles of Major Players Impact Hub, WeWork, Knotel and More (PR Newswire, Sep. 21, 2021)
The Global Coworking Space Market 2021-2025 has been released, and is poised to grow by $13.35 billion during the next four years. The report takes a holistic approach at the future of co-working by looking at global markets, including developing countries.
Nearly 70% of Big U.S. Companies Are Adopting a Flexible Work Model, Says Morgan Stanley (Market Watch, Oct. 5, 2021)
“Our analysis suggests 69% of corporations are adopting a hybrid structure such as 3 days in and 2 days WFH,” Ronald Kamdem’s team of equity analysts and researchers at Morgan Stanley, wrote in the Tuesday report, which tracked corporate data and policies through for the third quarter. Only 10% indicated a preference for office work, when examining the evolving policies during the pandemic in seven industries.”
What Corporate Offices Can Learn from the Co-Working Space Boom (Forbes, Oct. 5, 2021)
According to Forbes, 80% of employees do not want to return to the office full-time, and 39% say they will quit their current position if their bosses do not provide some flexibility in work from home options upon their return. Though most Americans are hesitant to return to their offices, co-working spaces have experienced a 158% rise in openings in the past year.
Useful Websites
ccim.com — Commercial Investment Real Estate Institute
irem.org — Institute of Real Estate Management
sior.com — Society of Industrial and Office REALTORS®
boma.org — Building Owners and Managers Association
crewnetwork.org — CREW
naiop.org — National Association of Industrial and Office Properties
uli.org — Urban Land Institute
eBooks & Other Resources
eBooks.realtor.org
The following eBooks and digital audiobooks are available to NAR members:
How to Design and Build a Green Office Building (eBook)
The New Corner Office (Audiobook)
Office Building Safety and Health (eBook)
Office Markets and Public Policy (eBook)
Retrofitting Office Buildings to be Green and Energy Efficient (eBook)
Books, Videos, Research Reports & More
The resources below are available for loan through Member Support. Up to three books, tapes, CDs and/or DVDs can be borrowed for 30 days from the Library for a nominal fee of $10. Call Member Support at 800-874-6500 for assistance.
Income/Expense Analysis: Office Buildings (Chicago, IL: Institute of Real Estate Management, 2018) HD 1394 In7i
The Energy Wise Workplace: Practical and Cost-Effective Ideas for a Sustainable and Green Workplace (Lanham, MD: Rowman & Littlefield, 2017) HD30.255 .D66 2017
The Valuation of Office Properties: A Contemporary Perspective (Chicago, IL: Appraisal Institute, 2009) HD1393.58.U6 S55 2009
Lease Guide: Guide to Writing a Commercial Real Estate Lease Including Green Lease Language (Washington, D.C.: BOMA International, 2008) HD 1384 T23
Office Building Management (Chicago, IL: Institute of Real Estate Management, 2002)
Mastering Office Leasing: A Practical Guide (Washington, D.C.: Society of Industrial and Office Realtors, 2000) HD 1384 So1m
Green Office Buildings: A Practical Guide to Development (Washington D.C.: Urban Land Institute, 2005) NA 6230 G74
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