Demand for office space on the rise

Companies are showing an increased interest in renting workspace, and tenants are demanding more from landlords when they search for offices.

While hybrid and even fully remote work options appear to be here to stay for many companies, the demand for office space in 2022 is higher than it was in early 2020. What companies are looking to get out of their offices has changed, however, and it’s putting the onus on landlords to provide more options for commercial tenants.

According to a new study from CommercialCafe, which is a follow up to an earlier study from 2020:

• Google Trends data shows searches for “office space for rent” and “office space for sale” in 2022 surpassed pre-pandemic levels.
• Asked about the motivation behind their current search, 24% of respondents said their search had been prompted by a need to downsize their office footprint, while 14% are interested in a quality upgrade to their workspace.
• Regarding the office space and amenity preferences, 53% of our respondents said that they look for the same things in an office as pre-pandemic, while 12% highlighted the need for more natural light and generous outdoor areas.
• Respondents are aiming either for a full return to the office (43%) or a hybrid system that requires employees to spend most of their time in the office (31%).
• An office space only for work is no longer feasible.

Asked about the motivation behind their current search for an office space, respondents’ options were relatively evenly spread between the available answers, notes Diana Sabau, a researcher with CommercialCafe, although the need for a smaller workspace that could accommodate hotdesking or a hybrid system had with a slight edge.

“While nearly a quarter said their search had been prompted by a need to downsize their office footprint, roughly 16% of those who completed the survey said they were looking for a larger office space,” says Sabau. “The data gives credence to the argument that remote working hasn’t made offices obsolete.”

Interestingly, 23% of respondents indicated that they’d like to be the sole occupiers of a building, states Sabau. Additionally, 23% of respondents pointed out that they were in the market for a better deal in terms of the overall price per square foot, while 14% were interested in a quality upgrade to their workspace.

“Extended periods of lockdown and isolation have made a chunk of workers eager to escape the confines of an artificially lit office, sealed off from the outside environment,” Sabau says. “Roughly 12% of survey participants highlighted the need for more natural light and generous outdoor areas as one of the main preferences they had developed following the pandemic.”

Further, COVID-19 safety measures — along with general sanitation practices — ranked high with roughly 19% of respondents. Meanwhile, 7% of people would like a subletting option to be included in their lease agreement to allow for maximum flexibility in the event of changes to their workforce or the company’s preferred work schedule in the future.

Perhaps unsurprisingly, depending on your perspective, many of those who were actively searching for a new workspace were aiming for either a full return to the office (43%) or a hybrid system that requires employees to spend much of their time in the office (31%).

However, even among those actively searching for listings, no less than 27% claim to be looking for a space that can accommodate staff that will be mostly working from home. Notably, coworking offices have also reemerged as a great alternative for businesses aiming to be nimble and ready to scale as needed.

“Office providers have had to quickly pivot to offer more flexible, coworking, hotdesking, and short-term rental options to accommodate a workforce which has become increasingly hybrid,” says Teresha Aird, co-founder and CMO of Offices.net. “Businesses are starting to see the office more as a flexible, central hub in which employees can filter in and out as they please, meet to discuss key projects, socialize, network, and learn from each other.”

“As remote work started to get increased popularity, companies started to consider it as a good opportunity to downsize and reduce operating costs,” adds David Tully, realtor at eXp Realty. “Though COVID-19 complemented remote working in the changed scenario, it revealed the limitations of home working too. The significance of face-to-face interaction and collaboration can hardly be replaced with anything, [which] is why companies are once again trying to get back to the offices, at least to some extent. However, people are reconsidering their requirements. Some offices have decided they don’t need big spaces to accommodate 100% of their employees, settling for spaces for 60% to 75% of employees [instead].”

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