Employers have discovered that remote working is not only cost effective, but also can have a healthy impact on productivity.
This has left landlords concerned about the popularity of this arrangement and how it could impact office takeup in the future.
However, Craig Braham, CEO of Advocate Commercial Real Estate Advisors, believes the future of the office will be more nuanced.
Braham said that last year, transaction volume for his company was down 80% in Chicago.
Now, the company has over 5 million square feet of discounted sublease space being offered in downtown Chicago, which has driven rental rates down.
With prices being driven down as landlords attempt to sweeten the pot for tenants, Braham believes it’s a good time to take up space.
He added that while 75% of his company’s deals come from lease expirations and the other 25% comes from lease restructuring, he anticipates that this ratio will flip over the next two years.
“Say you are a firm with 30,000 square feet in Chicago but find now that you will only need 20,000 feet going forward. You could try to put the extra 10,000 square feet on the sublease market, but if you do you’ll find you’ll be forced to discount it by as much as 75 percent and be losing big money,” said Braham. “But if your lease is due to come up in two years you could go back to your landlord now and persuade him to take the extra space off your hands.”