The gradual rollback of remote work arrangements, which were put in place as a short-term fix to keep businesses operating during the height of pandemic lockdowns, has now given rise to one of the most contentious issues in the employment arena. To return to the office, or not to return, that is the question. 

Some prominent businesses like Spotify are steadfastly upholding flexible work-from-home policies, stating resoundingly that “remote staff aren’t children.” Other tech giants, however, such as Amazon and iPhone challenger, Nothing, have made U-turns on their previous work-from-home policies, implementing return-to-office policies across the board for all corporate employees. 

Taking their lead from the tech heavyweights, return-to-office (RTO) mandates are now widespread for businesses throughout the United States. And with the new administration declaring an RTO mandate for all federal employees of government offices throughout the country, the tide well and truly seems to be shifting against remote, hybrid, and even flexible work schedules.

Drastic Shift: From Widespread Remote Work to Full RTOs

The prestige and dominant market power of big-name tech brands helps ensure they can continue to attract top talent in droves, regardless of any contentious mandates like a full RTO. This will remain true even despite the attrition of former remote hires who were attracted by the flexible work location policies of a few short years ago. 

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Overview of USA Office Market

During 2016, the USA office market was marked by a climate of cautious optimism and moderate growth across the board. This was mostly evident in office rental rates, which increased by a modest 0.1 per cent or even declined in cities like Chicago, New York, Washington and San Francisco. This was coupled with a slow-down in leasing activity, as net absorption rates only reached 6.5 million square feet during the last quarter of 2016. The bulk of lease transactions consisted of small and medium-sized office properties, and the total number of leases exceeding 500,000 dropped by 43 per cent.

Key market indicators (such as take-up, vacancy, and availability rates) were linked to the performance of those industry sectors that make up for the bulk of office occupiers in the USA. 2016 saw a tightening of the labor market in the tech sector, driving vacancy rates down to break the 10 per cent barrier for the first time. This offset the relative stagnation in activity coming from occupiers involved in financial services, legal, and government.

Important figures that reveal the market’s performance during 2016 included:

– A total inventory in excess of 137 million square feet

– Total vacancy rates of 16.9 per cent

– Annual net absorption above 1.1 million square feet

– Nationwide average asking rates $23.91

– Office space under construction 4.9 million square feet, of which 53.7 per cent is already pre-leased

USA Office Market by City

Mid-sized markets were among the best performers in the year that has just ended. Portland, Nashville, Salt Lake City, and San Antonio were characterized by occupancy increases that averaged 3 per cent. In San Francisco, market indicators were also positive despite the fact that occupancy growth levels dropped from 2.9 to 1.1 per cent. Other regional office markets that did well included Austin, Silicon Valley, and Seattle. In these markets, occupancy growth averaged 2 per cent. Read the rest of this entry »

Bolstered by a robust economic performance, the office market in Washington DC delivered a fine performance throughout 2015. Unemployment levels in the DC metropolitan area were at their lowest since 2008, reaching figures well below the US national average (4.3 per cent vs 5 per cent). These conditions have helped shape a real estate market that is predominantly favourable to landlords, as the following trends demonstrate:

Washington DC Office Market: 2015 Key Facts & Figures

During 2015, vacancy rates for all types of office space in Washington went down to 10.5 per cent, pretty much in line with the city’s historical average of 10.7 per cent. At the same time, net absorption levels increased by a staggering 185 per cent, going from 198,000 square feet in 2014 to 398,000 by December 2015. Nearly half of the transactions involved office stock in Washington’s CBD, which clearly outperformed all other sub-markets. This is attributed to the ongoing influx of new tenants relocating from secondary office locations into the CBD. This trend began to be evident in 2014 and has been solidified over the past 12 months. Read the rest of this entry »