Last year, the world was eager to return to live events, such as concerts and games after over one year of lockdowns.
However, one destination has still struggled to receive the same warm embrace: the office.
Prior to the pandemic, the office was seen as a necessity – a place professionals were expected to go eight hours a day, five days a week.
“The big movement toward working from home was started by the pandemic, but at this point, it would be hard to argue the people are still doing it because of health risks,” said John Chang, National Director of Research and Advisory Services at Marcus & Millichap.
It turns out, employers can’t afford to be heavy handed with their office return desires too.
According to recent reports, the U.S. added 3.5 million jobs during the first eight months of 2022. However, there remains twice as many job openings as there are job seekers, meaning companies that offer flexible work policies are well-poised in the competition for talent.
Despite a looming recession, Chang believes that the hybrid work model is here to stay, although it could undergo some changes.
“There’s a labor shortage. So unless we have a more severe recession…the employment market is simply too tight for companies to bring employees back to the office full-time,” said Chang. “And that impacts all types of commercial real estate.”
Among the office sectors that are expected to recover, suburban spaces are likely to perform well in the near future as employees seek a “third space” closer to their homes and away from central offices.
“Pretty much anywhere where there’s a lesser commute or you’re in a suburban area or a less dense area—that’s from an office standpoint where folks are most likely to return,” said Gil Borok, CEO of Colliers U.S. “And in terms of opportunities, if you’re an investor, obviously those markets follow suit.”