As many in CRE have been scratching their heads over the future of office property, Colliers tried asking more than 500 corporate CRE users of traditional office space. The big take: hybrid is here to stay and it's going to reduce the requirements companies have for spacing going forward.
Ironically, given how many companies have wanted to bring workers back into the office for the sake of culture and retention, hybrid arrangements could help become a draw as it improves work/life balance. Which may help companies, but not necessarily property owners and operators.
The survey, conducted both online and at the CoreNet Global Summit in Chicago, found respondents were focusing on the work/life balance benefits and also redefining their space strategies success "in terms of space utilization rates as workers divide their time between remote locations and the office."
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According to the respondents' answers, the move to hybrid will have strong impacts on average demand for office space. Only 7% of respondents said that they would need more office space or would feel no impact. Roughly 93% expected to use less space. For 21.2%, the cuts would be upward of 20% their current use; 52.8% expected to use between 20% and 40% less; and 18.8% would cut space needs by 40% or more.
In a separate question, respondents estimated what portion of their space portfolios would move from traditional leases to flex space within the next five years: 40.5% said 0% to 20% of leases; 40.8% said 20% to 40%; and 18.5% said 40% or more.
When asked what "successful" average utilization of office space meant, at 76.7%, the largest cohort, said between 45% and 79% occupancy, Tuesdays through Thursdays.
That may seem disturbing, but it isn't that far off from historical practice. Before the pandemic, data sources suggested that typical occupancy was between 61% and 65%, Darin Buelow, principal and global lead for location strategy for Deloitte Consulting, tells GlobeSt.com. "We know writ large, looking at all kinds of occupiers, occupancy across the country seems to be around 40%, 45%," he said.
When asked about the biggest challenge with a majority of people out of the office, the three top answers were loss of cultural identity and cohesion (34%), negative impact on the younger people who need development and coaching (31%), and employee engagement and retention challenges (24.9).
The big advantage when people work from home, a better work/life balance according to 49%. The next two were reduced occupancy costs (14.6%) and easier recruitment (13%).
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