Landlords beware: Office tenants procrastinating on hybrid planning

Survey says only 40% of office occupiers have official plans for future of work

National /
Oct.October 25, 2021 11:30 AM
Though a majority of business leaders think hybrid work is here to stay, only 40% have taken steps to establish a plan for the arrangement’s future, (iStock)

Though a majority of business leaders think hybrid work is here to stay, only 40% have taken steps to plan for its future. (iStock)

A majority of office-using businesses are yet to decide what their hybrid future should look like.

Hybrid work is underway in 72 percent of office-based companies and 65 percent said they don’t anticipate having any one dominant work location in the future, according to a new survey from Ernst & Young.

A majority of business leaders believe a hybrid work model is here to stay, but only 40 percent of the survey’s respondents said they have taken steps to establish a plan for its future.

“There’s a lot of big decisions to be made, and I think a lot of people are having a hard time making those decisions,” said Mark Grinis, EY’s global real estate, hospitality & construction leader. “The data shows that they’re taking a wait-and-see attitude.”

The survey from the professional services firm, also known as EY, involved more than 500 business leaders from across the country to launch its Future Workplace Index.

The reluctance to commit to widespread office returns comes as major U.S. markets struggle to emerge from depressed leasing activity.

Manhattan’s pandemic-powered office slump reduced net absorption in the past 18 months to negative 36.6 million square feet, or about the size of the office market in Downtown Los Angeles, according to Colliers International. The borough’s leasing activities finally rebounded in the third quarter, indicating that some companies finally started to make plans for the future.

The same period saw a record rate of workers returning to the office. An average of 36 percent of the workforce returned to offices in the 10 top U.S. office markets in the first week of October, according to access-card data from Kastle Systems.

New York City saw a promising rise of almost 10 percent in employees’ returning in September, reaching 30 percent of its workforce back in the office. But the figure pales in comparison to the 62 percent predicted by employers who responded to a survey for Partnership for New York City.

According to the EY survey, 87 percent of business leaders said the pandemic has changed the role of the office for their organizations. Of particular concern to office landlords, 57 percent said productivity has surpassed pre-Covid levels. On top of that, 72 percent said their corporate culture has improved while operating in a hybrid work model.

To make the office experience superior to a home environment so that employees want to come to their offices, landlords “need to recognize they are in more of a hospitality business than a four-white-wall business,” Grinis said.

Some commercial landlords appear to have already taken note of how to lure tenants back amid the market’s lowest points. The New York Times reported in June that office buildings were rolling out a previously unseen range of amenities.

In addition to ventilation systems, Zoom-friendly conference rooms and flexible seating for variable work schedules, some buildings debuted amenities focused on social and cultural attractions, the Times reported.





    Related Articles

    arrow_forward_ios
    Brick + Timber principals Glenn Gilmore and Jesse Feldman and photo of the building at 2724 and 2734 Northwest First Avenue in Wynwood (LinkedIn, FutureVision Studios)
    Brick & Timber Collective is piling up Wynwood properties, pays $9M for new office/retail building
    Brick & Timber Collective is piling up Wynwood properties, pays $9M for new office/retail building
    Cabot Properties' Franz Colloredo-Mansfeld with Miramar Centre Business Park (Cabot, iStock) Lease, Logistics
    Lease roundup: Ryder Logistics leases 150K sf at Miramar Centre Business Park
    Lease roundup: Ryder Logistics leases 150K sf at Miramar Centre Business Park
    From left: Scott Sherman and Ben Mandell (Tricera Capital, iStock/Photo Illustration by Steven Dilakian for The Real Deal)
    Tricera Capital co-founder Ben Mandell buys out partner Scott Sherman
    Tricera Capital co-founder Ben Mandell buys out partner Scott Sherman
    Innovation District (DB Lewis Architect-Thresholds Intl, iStock)
    Mike Zoi’s Motorsport firm proposes offices at Magic City Innovation District
    Mike Zoi’s Motorsport firm proposes offices at Magic City Innovation District
    From left: David Edelstein, Alex Karakhanian and Victor Ballestas in front of the property at 3601 North Miami Avenue (Lndmrk Development, Tricap, Integra Investments, LoopNet)
    David Edelstein, partners buy Design District dev site, plan office tower
    David Edelstein, partners buy Design District dev site, plan office tower
    Nuveen CEO Jose Minaya and 801 Brickell Avenue in Miami (Nuveen, Colliers)
    Lease roundup: Nuveen moving Southeast HQ to 801 Brickell
    Lease roundup: Nuveen moving Southeast HQ to 801 Brickell
    From left: Buyers Neil Merin, Dung Lam and Jordan Paul along with 1001 Yamato Road (top) and 999 Yamato Road (bottom) (NAI/Merin Hunter Codman, Moris Moreno)
    Yamato Office Center in Boca Raton trades for $46M
    Yamato Office Center in Boca Raton trades for $46M
    The Gateway at Wynwood office building at 2916 North Miami Avenue with R&B Realty Group CEO Aron Rosenberg (LinkedIn, R&B Realty Group)
    Lease roundup: Gateway at Wynwood, Goodtime Hotel score tenants
    Lease roundup: Gateway at Wynwood, Goodtime Hotel score tenants
    arrow_forward_ios

    The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

    Loading...