There’s a new normal in real estate, and it’s not great news for landlords.
Kastle Systems recently found that the average 43% office occupancy seen in recent months could be the new norm.
Based on the firm’s 10-city average Back to Work Barometer, which measures office entry-card swipes across various markets and compares the data to pre-pandemic levels, office occupancy has remained at less than 50% over the last two months.
Six out of the 10 markets surveyed — including Austin, Dallas, and New York City — saw decreased office occupancy, suggesting that it’s not just the biggest metropolitans suffering from low attendance rates.
Hybrid work is likely the biggest culprit in what is a landlord’s worst nightmare. For instance, CBRE’s 2022 Spring US Occupier Sentiment Survey showed that nearly three-fourths (73%) of companies had plans to adopt some type of hybrid policy this year.
Recently, senior economist Stefan Weiss also predicted that the wide adoption of hybrid work could reduce office demand by around 9%.
Despite the clear pivot in workplace arrangement sentiment, some leaders have remained bullish on returning to the office. Just last week, Tesla CEO Elon Musk informed employees that they must be in the office for 40 hours a week, minimum.
Still, the last two years have solidified a shift in power from employers to employees. Now more than ever, professionals are willing to leave their jobs in search of a position that best suits their work-life needs.
And companies that refuse to accept the reality of the new workplace are likely to become victims to the Great Reshuffle.