The Future of the Office Real Estate Market

What is the future of the office real estate market? In recent years, even before the COVID-19 pandemic, the U.S. office real estate market had been subject to contraction for several reasons. Businesses implemented "open office" concepts such as hoteling and/or hot-desking, creating a "hub and spoke" model that was enhanced by hybrid or full-remote work. These concepts, along with the advancement of technology, and the growth of co-working facilities resulted in reducing office footprints, putting downward pressure on occupancy levels.

Then along came COVID-19. Office buildings that, before COVID, were fully leased and occupied on weekdays, suddenly were empty as workers were forced to work from home during the height of the pandemic. Though many businesses have reintegrated their workers' return to the physical office with full or partial week schedules, it appears that at least some form of hybrid work schedules — much more than existed pre-pandemic — are likely here to stay. How these increased trends may impact the office market and demands for office space in the foreseeable future remains to be seen, as other economic and market forces have created other pressures on office properties.