Overall Office Vacancy In The US To Spike To 18%
USA – A report by Cushman & Wakefield forecasted that with more than 25 percent of staff across the country still working from home most of the time and with this percentage expected to rise in the future, the overall office vacancy in the country could surge to 18 percent in 2030 from just 12 percent in 2019, reported Fortune magazine on Thursday morning (23 February, SGT).
The real estate consultancy projected that up to 330 million sq ft of office space across the country could lie vacant and unused by 2030 because of remote and hybrid work. Adding 740 million sq ft of workspace that are expected to become vacant due to “natural” causes, the total amount of unused office space could reach about 1 billion sq ft in the next 7 years.
If the forecast pans out, the impact would be severe – property managers and office landlords would struggle to make up for the lost earnings, while city governments would see lower taxes from commercial buildings, leading to lesser social and welfare spending.
Notably, many firms, particularly tech companies went on a hiring binge in late 2020 and 2021, while some increased their investments in new workspaces, betting that their larger labour force would return to the office soon. Tech giants like Amazon, Google, and Facebook’s parent company Meta snapped up vacant office towers in Manhattan and across the US.
However, employees’ insistence on continuing their hybrid working arrangement and the increasingly uncertain economic conditions has forced the tech industry to re-evaluate their office space usage in 2022. Now, many tech companies had to divest their newly acquired workspaces or reduce their office footprint, including Meta and Salesforce.
Cushman & Wakefield stated in its report that the office downsizing by tech firms may herald a much wider downtrend in the urban office market in the coming years, and other industries should begin accepting that reality now.
“Obsolescence is kind of the word of the day right now,” commented the property consultancy’s President Andrew McDonald on the report’s forecast. He added that study should represent “an inflection point, perhaps” for how businesses should start looking at their office space requirements from this point and beyond.