New Jobs Leading to Rising Office Demand
At Cresa, we are seeing a rise in demand for office space over the summer. As companies resume in-office operations, we expect this demand to continue to rise. There is still the impact of remote working and hybrid offices, but we see more companies returning to “normal” regarding their commercial office space requirements. Here’s a very recent article by Les Shaver from GlobeSt.com that has some hard-hitting statistics that rising office demand is being fueled by new jobs. Highlights
- In general, demand for office jumped 43.3% in the second quarter of 2021 and is now only 14% below its 2018-2019 average, the most recent pre-pandemic benchmark.
- While demand for office space usually moderates in the summer, it actually rose 10.3% month-over-month in June, after taking a short pause in May. After jumping 43.3% in the second quarter of 2021, demand for office space is only 14% below its 2018-2019 average.
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Rising Office Demand Fueled By New Jobs, End of Remote Work
Les Shaver
July 29th, 2021
After jumping 43.3% in the second quarter of 2021, demand
for office space is only 14% below its 2018-2019 average, the most recent
pre-pandemic benchmark.
If a city is seeing a faster downtown office recovery, two
things are usually happening. First, local employers are requiring
employees to come
back into the office. Then, cities are seeing strong growth in job listings,
says the VTS Office Demand Index (VODI) monthly report.
Increasingly, these factors are in play across even the
largest hard-hit metro areas.
New York (98% recovered), Los Angeles (99% recovered), and
Chicago (83% recovered) lead the nation’s office recovery, with New York and
Los Angeles now essentially back at their 2018 and 2019 average demand
velocity. New York, Los Angeles and Chicago have job postings 21.0%, 27.0% and
29.2% above their pre-pandemic levels.
The cities with slower office recoveries, San Francisco (67%
recovered), Boston (56% recovered), Seattle (66% recovered), and Washington,
D.C. (76% recovered), are home to some of the nation’s highest shares of
remote-friendly jobs. Three of the four of those cities have a lower rate of
job postings than their counterparts.
San Francisco, Boston and Seattle have job postings 10.8%,
20.8% and 16.2% above their pre-pandemic levels. While Q2 demand for office
space grew 84.2% in Boston, the city still has the lowest VODI of those covered
in the report.
In general, demand for office jumped 43.3% in the second
quarter of 2021 and is now only 14% below its 2018-2019 average, the most
recent pre-pandemic benchmark.
With all markets showing demand for office space in Q2, the nation’s recovery from the pandemic changed seasonal leasing patterns. While demand for office space usually moderates in the summer, it actually rose 10.3% month-over-month in June, after taking a short pause in May. After jumping 43.3% in the second quarter of 2021, demand for office space is only 14% below its 2018-2019 average, the most recent pre-pandemic benchmark.
“Employers are grappling with how to handle the future of
work—do you make employees come back, offer hybrid opportunities or go fully
remote? While it’s not our place to say that every company should bring their
employees back into the office full-time, we can say that there is a clear
distinction in recovery between cities depending on how remote-friendly their
jobs are,” said VTS CEO Nick Romito said in a prepared statement.
The flight to quality is still strong in New York City, with
more than two-thirds (76.7%) of the demand for office space in June for space
in Trophy and Class A buildings. That is a lower share than during the peak
upgrade opportunity during the pandemic trough in June 2020 (79.4%) but still a
higher percentage than right before the pandemic in February 2020 (71.3%).
End of Article
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