The Decline of the Office Real Estate Market
Companies are dropping office space as working from home becomes a new normal — one that's likely to endure after the pandemic. That’s ground shaking for cities which thrived on millions of commuters every day. Office vacancies are dramatically increasing over the prior year, and the value of commercial space is plunging. Cities are facing an economic reckoning as high percentages of employees are expected to continue working remotely.
JPMorgan Chase, Salesforce and PwC are among companies nationwide trying to sublet office space they don’t plan to use.
We have a chance to rethink the American city. How we use public space, what we'll do with shrinking commercial real estate demand, what transit looks like - all of these are on the table. This is an opportunity that we can rise up to meet with innovative solutions.
Corporations over the years professing "corporate culture" as a driver for a shared mission, financial performance and effective work environment are rethinking their space needs for core operations.
How and where work will be done in the future is fascinating- the reimagining is happening right now. The consensus is that the office of the past will not be the office of the future with the increase of remote work as typical rather than an exception.
However- the office will still play a key role in collaboration- how we think about utilizing these spaces for creating moments that matter is critical.
With remote workplaces now the new regional offices, companies are unloading blocks of office space like a hot potato. Long term, lower demand for office space could be permanently lower
Few corporations don’t envision a return to anything more than 2-3 days per week. This is a reflection of the recognition that technology has advanced to a significant level (and will only continue to improve) and office workers have also proven that they can efficiently work remotely, regardless of where they choose to work. If part of the function of the office is efficiency, then that part time out of the office increases productivity while coming to the office part time facilitates collaboration.
Remote work is here to stay. The pandemic has changed the way of working in organizations. even the most traditional and older ones. Decentralization of office space will be a big boost to local communities and neighborhoods which will ultimately be very helpful to cities.
This is likely to be the biggest change to our world in more than half a century. Commuter traffic will not all be coming back at pre-crisis levels, and transportation systems must change. This is a fundamental shift and funding from D. C. to keep doing the same thing is not the solution.