Decreased Office Density Could Mean Decreased Demand
CoStar Group is anticipating that the era of high-density offices could be over as hybrid working becomes the norm for much of the workforce.
CoStar expects that the hybrid model, allowing employees to part-time at home and in the office, would be the most efficient arrangement for the future. Workers and employers both have expressed wanting flexibility in the workplace, while also wanting the camaraderie of the office environment.
Demand for office space will depend on three factors, including sustained remote working, changes to office density and employment growth for office jobs.
However, CoStar calculated that the increase of remote working and decreased office density could lead to less demand for office space. For example, a 34% boost in remote working and 20% increase in square footage per employee could still decrease overall demand by 12%.
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Although it appears there could be an overall decrease in demand, CoStar expects that Class A properties will continue to thrive, while middle and lower-quality buildings will be at risk.
Additionally, the commercial real estate group believes that Atlanta, Austin, Charlotte, San Francisco and Seattle will see an increase in office-based work. This offers a glimpse of promise, as office-using sectors will indicate how well the office industry prospers in the near future.
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