Posted on February 24th, 2022
The US office market struggle to get back on its feet for most of 2021, despite the year starting with the expectation that this arm of the commercial real estate market would be on its way to recovery by Q3 to Q4. Ultimately, the emergence of the Delta and Omicron variants of COVID-19 resulted in forecasts being revised, and the recovery horizon was pushed to 2022.
We’ve collected a brief overview of the trends, figures, and projections for the 2022 US office space market below, check back frequently in the year ahead for more insight into industry trends and recovery projections.
Economic Indicators Tipped to Improve
There are many factors influencing office market performance, but macro-economic indicators are some of the most critical. As we settle into 2022, a decline in unemployment is expected to be one of the most important factors underscoring the recovery of the office market. Recent data from the U.S. Bureau of Labor Statistics outlined a small uptick in unemployment in January 2022, moving from 3.9% at the end of 2021 to 4.0% to end the first month of the new year. Read More »
Posted on February 11th, 2022
Notable Office Market Insights
- Ongoing recovery is the main theme, continuing the trend seen in most office markets throughout 2021.
- Positive absorption indicators.
- Slight increase in rental rates.
- Marked differences in occupancy levels, vacancy rates and general performance from city to city.
- Remote working practices are still commonplace in key markets, such as San Francisco.
- 142 million square feet of office space currently under construction.
Lease Rates & Asking Rents
Recent data from Commercial Edge outlines a nationwide rental listing rate average of $38sq/ft in January 2022. These figures may be seen as somewhat inflated due to the number of high quality spaces currently listed due to being vacant, with Class A workspaces being listed at much higher prices.
According to Avison Young, Q4 average rental prices per square foot in gateway markets were as follows:
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Posted on December 15th, 2021
In September 2021, 4.4 million Americans quit their jobs. This staggering statistic, combined with the fact that one in four workers had already left a job in the last 12 months, illustrates the clear reality that workers are resigning at significantly higher rates than prior to the COVID-19 pandemic. Despite the turmoil the pandemic has brought to the United States economy, workers seem more willing than ever to pivot careers and quit their jobs.
Origins of the Great Resignation
In the 20 years prior to February 2021, the resignation rate in the United States had never surpassed 2.4% in any given month. However, around a year into the COVID-19 pandemic, this changed. Typically, resignation rates are seen to decrease during periods of high unemployment, as was seen in the immediate wake of the pandemic and the uncertainty it generated. More recently, experts have discussed the so-called ‘Great Resignation’, a phrase that is linked to the recent shift that has seen employees leaving their jobs to explore other options.
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Posted on December 2nd, 2021
Eight hours per day, 4 or 5 days per week: the average office worker spends tens of thousands of hours at work over the course of their career.
In our last blog post, we covered 5 ways to create a great office culture. Today, we’re building on these ideas and exploring some of the important steps that businesses can take to create a healthy and productive working environment for this culture to thrive in.
Because of the significant amount of time that people spend at work, employers have a duty of care towards their staff. Among other things, this entails going the extra mile to create the healthiest possible workplace environment. Here are some tips to help employers build a more productive work environment.
Adopt a holistic approach to workplace health
Health isn’t just physical; it has psychological components too. A holistic approach to health in the workplace means paying attention to:
- Physical health: Health and safety, ergonomic furniture, wellness amenities, etc.
- Psychosocial health: Relationships between co-workers, management style, communication, positive values, flexible hours.
- Development: Providing professional development opportunities and incentives to be productive and set new goals.
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Posted on November 4th, 2021
There’s no doubt that a healthy organizational culture is one of the greatest assets any company could have. Employee engagement, motivation, retention, and talent attraction are greatly influenced by company culture.
But culture can be an abstract concept. How exactly can a healthy corporate culture be cultivated in an office environment? In this article we’ll look into five ways you can do so.
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Posted on July 21st, 2021
Office renovations can help create a more productive workplace and support a business’s branding strategy. However, these projects can have a significant impact on capital expenditure. Calculated per rentable square foot (RSF), fit-out and renovation costs went ranged from $90 to $220/RSF in 2019-20, depending on location, office size, cost of labor, and industry sector – since some businesses (such as tech companies) require fit-outs to higher and more costly specifications.
What follows is a breakdown of the costs involved in renovating an office in the United States. *
These costs involve the removal, addition or alteration of physical elements in a building, office floor or office unit. Construction costs include materials and labor, as well as fees charged by contractors, and they serve as the biggest expense in fit-out projects – accounting for 50% to 70% of the total cost.
Average costs are $90/RSF. Depending on location, they can be as high as $139/RSF or as low as $54/RSF.
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Posted on June 23rd, 2021
The US office market has been dramatically transformed by the changes to work practices and mobility restrictions implemented throughout the course of 2020 and early 2021. Whilst it was predicted that the market would slowly rebound starting in recent months, the demands of office occupiers will have changed substantially since the start of the COVID-19 pandemic. Below is a brief overview of the main things to look for in an office space during the second half of 2021.
Flexibility remains a key consideration when choosing an office, not only in terms of lease terms, but also office layouts. Many office-based companies are still unsure about their ability to retain staff in the face of reduced revenue, combating this uncertainty by implementing rotating shifts or flexible work hours, two factors which have ultimately led to businesses struggling to identify the total headcount in the office at any given time.
This uncertainty will lead to an increase in demand for modular spaces that can be adjusted depending on the number of people present in the workplace. These kinds of dynamic layouts have been an option for several years, often going hand in hand with trends towards multi-functional office spaces. Some of the main elements that typify flexible workspaces include:
- Blurred indoor to outdoor transitions.
- Movable walls and room dividers.
- Lightweight or mobile office furniture.
- Adjustable or movable lighting.
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Posted on April 22nd, 2021
A sublease is an agreement between a party who already hold a lease to a property and a separate party looking to rent the property in question, whether that be partly or wholly. For example, a business who leases five floors of office space in a building may look to sublease one of those floors, in the event that they downsize their workforce prior to the end of the initial lease. The party who holds in initial lease is known as the sublessor, whilst the third party looking to occupy a part of the leased space is the sublessee.
How to Sublease
The first step is to check whether you need your landlord’s written permission to sublease a property. This should be outlined in your lease agreement. If subleasing is permitted, the agreement may also specify whether you’re required to give notice to your landlord.
Next, make sure you’re familiar with the legal aspects of subletting in your area, since every state has its own sublet laws that take precedence over lease agreements. You can check state-by-state details here.
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Posted on March 22nd, 2021
There are certain terms you need to be familiar with when renting commercial property in the United States. Here is a list of the most important key words, in alphabetical order.
All-inclusive space is available at a fixed fee and typically gives tenants access to equipped workstations, admin/reception support, and meeting rooms. Utilities, janitorial services, and security are usually included.
Office space is classified into three classes depending on quality standards and the amenities on offer.
Class A space is considered best-in-class and is usually located in new buildings that feature the highest standards of construction, design, and amenities. These offices are typically found in prime business locations.
Class B space offers a functional standard of accommodation to office-based businesses in need of well-maintained space at a reasonable price.
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Posted on February 25th, 2021
In a previous blog post we examined the performance of the commercial real estate market in some major US cities. This is the second article in this series, which uses data from late 2020 and early 2021 to examine vacancy and supply rates in cities such as Los Angeles, Chicago, Atlanta and Houston. These statistics illustrate the impact of COVID-19 on the commercial property rental market, as well as the types of properties that are holding strong in the face of negative trends.
Los Angeles is a hub for creative, media, and entertainment companies, many of which are office-based. The city’s proximity to major cargo ports makes it convenient for logistics and distribution businesses, both of which have kept the industrial real estate market strong.
- Vacancy rates in downtown Los Angeles are 21.5%.
- In Q4 20202, there was more than 5.5 million square feet for vacant space, with 3.4 million feet being in the Financial District.
- The majority of vacant inventory involves Class A offices.
- Supply increased by more than 2 million square feet in the past 12 months.
- No new supply is expected to enter the market as no projects are currently under construction in the CBD area.
- Vacancy rates average 22.5% outside of the CBD, however, they reach 56% in the Fashion District.
- Vacancy rates are just under 18% in the Greater Los Angeles area.
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