Recent study shows businesses increasing investment in office space on the heels of COVID-19

Recent study shows businesses increasing investment in office space on the heels of COVID-19

This story was written for WRAL TechWire partner CBRE | Raleigh.

On the heels of COVID-19, the workplace is changing. A recent Workforce Sentiment Survey conducted by global commercial real estate company CBRE found that, of the 10,000 employees surveyed across 18 countries, 85% of respondents preferred a hybrid work schedule — allowing for virtual work two to three times a week.

Additionally, CBRE’s 2021 Occupier Sentiment Survey found that 87% of large companies with 10,000 or more employees are planning on adopting a hybrid schedule if they haven’t already done so yet.

For these companies, that means figuring out what a return to the in-person workspace looks like.

“Early on in the pandemic, we saw a lot of companies looking to reduce their office space and cut down on some costs. Recently, we’ve seen a number of large subleases being capitalized on in the market — like the MetLife sublease to Apple and the Durham.ID sublease to Google — which indicates great absorption,” said Jason High, a tenant representation broker at CBRE | Raleigh. “Along with that, we’re seeing some companies change direction and pull their space off of the market in order to re-occupy.”

High added, “Companies are still trying to understand what their footprint is as recovery continues, and there’s certainly not a one-size-fits-all solution.”

Space occupation will look different for every company depending on their density. One silver lining of the shift to remote work over the past year is that it gave companies the opportunity to step back and evaluate the needs of their employees and what sort of environment would best serve them.

For example, since hybrid schedules mean fewer people in the office at one time, space can be used more creatively. On the other hand, for companies that expanded their footprint and increased hiring, companies have had to strategize on how to make the office a place that new employees want to spend time.

“I view the office space of the future as a sort of an upscale hotel lobby. It’s highly amenitized and offers lots of different ways to work — stand-up desks, soft seating areas, breakout rooms, training rooms, large meeting rooms, enhanced food and beverage options. There will be a number of places where people can come together to collaborate and innovate on things they wouldn’t be able to do outside of the office,” said Heath Chapman, a tenant representation broker at CBRE | Raleigh. “Work is no longer about just having a space to work. We’re seeing this concierge-type approach to coming into the office and a level of socialization that we haven’t seen in the past.”

“The workplace of the future is going to have to be something that incentivizes people to come in from home and offers something different than what they get in their home office. Amenities were critical even pre-COVID, but now there’s even a larger focus from both a building-owner and tenant perspective,” added High. “You are seeing the incorporation of open-air collaborative space and rooftops, conference rooms and gyms, and space that allow for a connection between the exterior and interior.”

According to additional data from the Occupier Sentiment Survey, additional technology and amenities that large companies are planning to invest in include enhanced video conferencing hardware and software, employee experience applications, and workplace sensors to track occupancy rates.

For large companies like Apple that are looking for a move-in-ready space equipped with amenities, the subleasing market is ideal. Still, while the sublease market in the Triangle is larger than it has been in the past, both Chapman and High anticipate that changing in the near future.

“There is more sublease space on the market than we have had historically, but even still, that space makes up only around 4.5% of the overall office market. We’re very fortunate in Raleigh-Durham to have been relatively resilient throughout COVID,” said High. “We’re poised for a bounce-back, especially with companies like Apple and Google focused on Raleigh as a growth market.”

This story was written for WRAL TechWire partner CBRE | Raleigh.

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Kassie Hoffman
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