Tenants Now Want Creative & Adaptive Office Space
USA – Property consultancy CBRE revealed that while staff are returning to their workspace, they are not going back to the same types of office spaces they worked in before the COVID-19 pandemic, reported Mondaq on Saturday (13 August, SGT).
“Tenants are looking for creative office space and adaptive repurposing that lets them design the space around the way they work. This is especially true for those who want to accommodate enhanced technology throughout the office,” said CBRE President Lew Horne.
Occupants are also shifting away from individual offices and desks. Instead, they are incorporating more flexible designs that can be converted into workspaces and collaborative spaces as needed.
Moreover, Elizabeth Wilgenburg, a partner at law firm Allen Matkins, shared that flexible workspace is slashing the demand for traditional office space, in spite of some speculation that would-be tenants would seek out more office space to accommodate staff post-pandemic.
“Flexible space reduces the need for separate collaborative work areas and desk space. In some cases, companies are implementing a hybrid model or cutting back on positions, which reduces the number of workers in the building at a given time.”
In addition, office rents are expected to remain flat for now amidst high interest rates, as well as rising building costs and general uncertainty about the market.
“High interest rates have increased the cost of borrowing money, leaving tenants to rely more on landlords to provide funding for office projects. As a result, rents are staying flat or going down as landlords absorb these costs without raising the rent,” noted Horne, adding that office landlords who don’t provide tenants with the amenities and space they want will likely continue to see high vacancy levels.
“This has been a shift for landlords in key areas where rents have been consistently low in the last decade. The low rents made it possible for owners to avoid spending large sums of money on the buildings. In the current environment, this is no longer feasible, as people would rather continue working from home than be forced to work in an outdated or poorly managed building. This will likely be a factor until the current economic trends play out.”
Furthermore, Horne and Wilgenburg disclosed that two- and three-year leases are now more common than five- or ten-year leases. And this trend is forecasted to continue until firms have a better understanding of how their workspaces will function in a post-COVID world.