Metropolitan areas from coast to coast have been feeling the real estate pinch since the start of the COVID-19 pandemic. With a considerable chunk of the workforce operating from home at least part of the time, many businesses have opted to sell their office space or break their leases.
According to Statista, office vacancy rates reached 17.2 percent in the second quarter of 2021, causing concern for business owners, landlords, and investors alike. In big cities like New York and San Francisco, the squeeze has been even tighter, with vacancies consistently hovering over the 20 percent mark.
But 2022 brought reason for optimism. In many ways, life has returned to the way it was before the pandemic – thanks in large part to vaccine rollouts and increased testing. Gatherings are allowed again, mask mandates have been lifted, and the Centers for Disease Control and Prevention (CDC) has officially relaxed its guidelines.
“This is the year we return to the office. We will start to see a flight to quality as companies reengage employees that are comfortable working from home and bring them back to the office with amenitized packages,” said Steig Seaward, National Director of Research for Colliers International. “Medium-sized tech markets like Austin, Nashville, and Salt Lake City will lead the way to recovery. Major tech markets along the West Coast, although challenged at the moment, will also be a part of that recovery.”
Seaward’s prediction is already coming true. Amazon, Facebook, Google, and Apple all added office space during the pandemic. As early as 2021, Amazon announced to employees that it would “return to an office-centric culture” as its baseline.
“In the 10 largest U.S. cities, days worked from home shifted to roughly 38 percent from 50 percent in that same period, according to a team of researchers at Stanford and other institutions,” reports the New York Times.
Rapid economic recovery has also played a role in the rebound of the real estate market.
“Unlike other past recessions, this last one was not characterized by downturns in the purchase of goods and slackening housing markets. The opposite in fact occurred, and this has led to a continued growth of multi-family housing development and industrial space construction since the last cycle, while the ongoing pessimism for retail and office construction has reversed, beginning a new growth period for both sectors,” reports the UCLA Anderson School of Management.
The nation’s technology hubs are faring especially well. Silicon Valley’s office sector recovered all the absorption lost in 2020 – about 1.5 million square feet – according to Colliers.
And in Boston, the pandemic actually provided a boost to those leasing biotechnology and pharmaceutical space. Boston’s Life Sciences sector is projected to double in size to encompass 60 million square feet in the next decade.
While many are encouraged by the rapid recovery that’s taking place, plenty of challenges remain for business leaders: How do they move back into their offices safely? And what can they do to incentivize employees to return?
Facilities management firms like Flagship are equipped to help businesses navigate this post-pandemic territory. Not only do FM providers perform a wide range of services, but their expertise in areas such as space management and process improvement is particularly valuable to organizations in flux.
Flagship Facility Services is the right size to meet your evolving needs. With more than 30 years of experience, we offer a portfolio of facilities services – including cleaning, building engineering, maintenance, and project management. Still, we’re able to adjust quickly to match your current state of operations.
Our team takes a consultative approach to facilities management, providing guidance and working alongside you to optimize your space. Not only can we help make your facility work for a smaller number of people, but we’re willing to flex our staff, cleaning frequencies, and other contractual provisions as you make your way back to 100 percent capacity.
If you have questions about managing your office space through this period of transition, email one of our facilities experts here.
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