Flexibility has been the main word used to describe the work dynamic since Covid-19 has ceased to have as big of an impact on our professional lives.
Many companies have embraced a hybrid working style, allowing employees to combine remote work, which became the norm during the pandemic, with the ability to work from an office, whenever they wanted or needed to do so.
This has caused the corporate real estate (CRE) market to face a period of transition and uncertainty, as companies began to reevaluate the extent to which they needed to lease a large office space full-time. As seen in a survey conducted by BOMA (Building Owners and Managers Association) in 2022, 70% of 1,267 respondents, which are office space decision-makers and influencers, indicated that they planned on reassessing their office space needs, while 51% said they are likely to reduce their square footage.
This idea of reassessing and even downsizing the office footprint is aligned with office solutions such as coworking and flexible workspaces. Especially since most employees and companies are not necessarily pushing for a full-time return to the office, these workplace solutions can prove to be very cost-effective and supportive of a hybrid working model. In fact, as seen even among the BOMA respondents, most companies and their employees support an in-office presence of 3-4 days per week.
With this in mind, 2022 was a year of embracing flexibility and pushing back on a full return to the office, while not completely eliminating remote work. So, what should we expect in 2023? Here are several projected CRE trends to look for in the new year.
1. A Continued Shift in Real Estate Strategies
The shift we started seeing in 2022, with companies reconsidering their office space needs, is likely to continue in 2023, with more companies reducing their office footprint and choosing flexible office solutions for their employees.
As hybrid work implies that employees will still be working remotely part of the time, leasing an office space full-time can prove to be costly and occupancy rates are likely to be low. Many companies are likely to evaluate their leases, looking at current terms, prices, occupancy rates and lease periods, as well as new office space proposals and different office types to determine the best office solution.
Looking at the results from a survey conducted by Yardi Kube, 39% of prospective tenants indicated that they are currently using or looking into coworking solutions for their companies. This leads to the next trend in office spaces.
2. The Importance of Coworking Spaces and Flexible Workspace Solutions
Coworking spaces are likely to play a major role for companies in 2023 as they can provide their employees with the possibility of working from an office whenever they choose to, wherever they choose to.
The pandemic shifted our perceptions from traditional 9 to 5, five days per week, in-office work schedule to a fully remote work set-up and many employees are not willing to travel far to reach a certain office location, as no commute time is one of the main advantages of working remotely. Therefore, providing employees with access to coworking spaces that are close to their homes is more likely to get them motivated to want to work from that location.
The main advantage that comes with utilizing coworking spaces is that there are many available in any city and employees can easily find the one that works best when they opt to work from an office.
3. Flexible Work Schedules as Top Priorities for Employees
With remote work being the new normal for most employees, companies have to understand that returning to the office requires flexibility. To allow employees to adapt to the change to hybrid work, flexibility is key.
Flexible working hours and the option of choosing when to work from an office space are some of the main priorities for employees. Also, being able to accommodate employees that may have relocated by providing them with flexible workspaces can prove to be extremely beneficial to employee satisfaction and a great asset when hiring new employees.
4. Live/Work/Play Developments
For many employees, the pandemic has caused them to embrace a live/work/place environment, providing them with an opportunity to live in an establishment that offered them access to all these aspects from a centralized location.
Companies are likely to consider such establishments that offer residential, work, and social entertainment components under one roof to lease office spaces. Along the same lines, any office space solutions that support a suburban lifestyle rather than an urban one, where employees can easily access and enjoy all aspects of their life without the hustle and bustle of big cities, is likely to be a more popular option.
5. Office Spaces Designed for Community
The most important thing that remote work has deprived employees of is the sense of work community they used to have when working from the office. With companies embracing hybrid work, there is a need to focus on providing employees with a sense of community in their new office spaces. Interaction with other employees, events and office features that make employees feel comfortable and productive in the office are essential to enabling the hybrid work dynamic to function.
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The future of work is all about flexibility and office spaces need to provide their users with all the necessary features and amenities to embrace the ongoing shift to hybrid work. With this idea in mind, being able to adapt to the transition faced by the commercial real estate marketplace is essential to successfully embracing this new hybrid normal.
