Inflation has impacted nearly all aspects of the economy, and office recovery is no exception.
While office occupiers have had a bit of an easier time during these times of economic uncertainty, “they are experiencing no shortage of challenges as they adapt to work-from-anywhere and intense competition for talent that now has fewer city-edge borders,” according to Rebecca Rockey of Cushman & Wakefield.
Rockey, who serves as Global Head of Economic Analysis & Forecasting at Cushman & Wakefield, adds occupiers typically commit 30% to 70% of expenses towards labor, but wages must keep up with rising inflation or employers can risk losing talent.
“We have seen some examples, especially in high finance, of significant pay increases, but the impact on headline figures for office-using sectors has been muted thus far,” said Rockey. “Moreover, in today’s environment, employers are having to factor in benefits of flexible working as an additional and necessary perk to attract the best of the best.”
Moving forward, Cushman & Wakefield believes that office absorption will continue to be positive, with the firm expecting vacancy to top out and rents to decrease.
“But for now, there is no question that office occupiers have been the least hit by today’s inflationary environment,” said Rockey.