Although it may take until 2024 for the office market to rebound to pre-pandemic levels, the record number of new startup ventures could open a world of possibilities for the sector.
“With office space, the question is what will the hybrid work environment look like,” said Hessam Nadji, CEO and president of Marcus and Millichap. “Will there be less demand for office space per worker? We believe there will be and that will shrink demand—but at the same time when you have record number of new business startups and economic growth you’ll see new demand.”
The amount of demand for office space that will come from new startups is still uncertain, but it will likely include smaller offices or flexible workspaces.
Nadji added Arizona and Texas will likely benefit the most from this emerging trend as more and more companies migrate to these states.
However, Nadji stated that major cities such as Chicago, New York City, and San Francisco may struggle as they face high vacancy rates and more hybrid work models. The future of these cities’ office markets will depend on consistent job growth.
“The business formations that we are seeing are promising, but they have a long way to go to replace the vacated office space,” said Nadji.