A recent CommercialCafe survey found that companies have gained a newfound interest in renting office space again following the COVID-19 pandemic. The number of workspace searches have exceeded pre-pandemic totals, potentially ending concerns about the future of offices. The survey, which included responses from 1,242 CommercialCafe and its sister company websites’ visitors, also revealed that the number of demands tenants expect landlords to meet has also increased.
The CommercialCafe survey looked at what drove companies’ current office searches as well as Google Trends data to analyze shifts in popularity of key office sector search terms between March 2018 and May 2022. The CRE Internet listing service also asked real estate professionals for their insights on emerging market trends.
More people are looking for office space now than pre-pandemic
Google Trends data showed that terms like “office space for rent” and “office space for sale” both saw increases since March 2020, according to CommercialCafe’s report. After “office space for rent” searches fell in March 2020, it experienced a steady incline from that point forward and recorded a net growth in popularity vs. the time leading up to the beginning of the pandemic.
Meanwhile, “office space for sale” was a popular search term in January and February 2020, much more than it was during the same time in the past two years. Searches went up and down between March 2020 and September 2021 before it went on a steady climb that went past the totals during the final months of 2021 and the first quarter of this year.
Respondents want single-tenant leases in smaller office buildings
The reason why companies were searching for office space varied within CommercialCafe’s survey, with the desire for smaller office space that could accommodate a hybrid work system slightly edging out the other responses. About 25 percent of respondents said their search was due to needing to downsize their offices, compared to 16 percent who wished to expand.
“Once again, the data give credence to the argument that remote working hasn’t made office obsolete—as news of big companies either investing in prime real estate, renewing or expanding their leases has continued to pour in,” the report said.
Meanwhile, 23% of respondents said they want to be a building’s sole tenant. CommercialCafe noted larger companies have been making such a push as early as the summer of 2020. Morgan Stanley took over East Commons in Columbus when it expanded its office space by 16,000 square feet. Warner Bros. made a deal be the lone occupier of an 800,000 square foot campus at the Second Century in Burbank, Calif.
Remaining respondents said their search stemmed from wanting a better deal in terms of overall space per square foot (23 percent) and upgrading their workspace (14 percent).
Tenant demands: luminous offices, outdoor areas and safety measures
A lot of office workers are looking to get away from artificially lit offices after working from home for months, according to CommercialCafe. Its survey showed that about 12 percent of participants desire more natural light and additional outdoor areas in terms of office preferences they developed after the pandemic. In addition, COVID-19 safety measures also ranked high among respondents’ (about 19 percent) requirements to return to their office. Another 7 percent said they’d like a subletting option to be part of their lease agreement to allow for more flexibility in case their workforce or preferred work schedule changes in the future. More than half of the survey respondents said their preferences had not changed, however.
“The early days of the pandemic saw client requirements shift towards temporary spaces lacking in all but the most necessary amenities,” Teresha Aird, Co-Founder and CMO of Offices.net told CommercialCafe. “The no-frills options served as an attractive proposition for businesses and entrepreneurs looking to remain agile, making them particularly popular.
“Now office providers have had to quickly pivot to offer more flexible, co-working, hotdesking and short-term rental options to accommodate a workforce that has become increasingly hybrid.”
Interest in downtown, CBD locations remains high
CRE professionals were expecting their clients’ office location preferences to shift during the early months of 2020, as there were significant outpourings of the population across major U.S. cities. It was also unclear at the time how companies were going to handle their work schedule between remote work, in-person or hybrid. As it turns out, most companies (76 percent) surveyed said they were looking for office space in the same city and 45 percent of that group want to find an office near their city’s central business district (CBD) or downtown area.
Meanwhile, suburban office space demand has grown recently, as evidenced by the 45 percent of respondents who said they were considering such a workspace.
“We’ve seen clients looking to downsize their spaces (mostly in CBD locations), or alternatively shift towards cheaper locations in the suburbs to accommodate for fewer people working and visiting the office,” Aird said. “In terms of businesses that we’ve seen demand from, high-performing SMEs with strong online presences have emboldened by post-pandemic market resurgences, now setting their sights on premium CBD locations. For small businesses and start-ups, they’re still targeting more urban and suburban HQs.”