Hybrid working will push US office vacancies 55 per cent above their pre-pandemic levels to a record 1.1bn square feet by 2030, according to a forecast that attempts to quantify the impact on the commercial property sector wrought by changing work patterns.
The report by commercial real estate adviser Cushman & Wakefield found that 330m sq ft of office space — roughly equivalent to all the office inventory in the Washington metropolitan area — would be made redundant by hybrid or remote working by the end of the decade. That would come on top of another 740mn sq ft of space that it classified as “normal or natural” vacancy.
Cushman concluded that roughly a quarter of US office space was already undesirable and another 60 per cent was at risk of obsolescence and might require “significant investment” to upgrade or repurpose it. While such trends were most acute in North America, they were also evident in Europe and Asia, the company noted.
“Obsolescence is kind of the word of the day right now,” said Andrew McDonald, Cushman’s president, calling the report an acknowledgment of “an inflection point, perhaps”.
On a recent earnings call, another major property figure, Steven Roth, chief executive of Vornado Realty Trust, acknowledged that hybrid working would not be a passing phenomenon, telling analysts: “I think you can assume that Friday is dead forever . . . Monday is touch and go.”
In an interesting article, Financial Times writer, Tim Harford, look at why hybrid work is sticking. Harford says that the pandemic showed that remote/hybrid work works and can be highly productive. He also notes that people have invested in it, buying decent chairs, microphones, and the technology, such as Zoom, Google Meets, Microsoft Teams that facilitate remote working.
One of the UK’s biggest banks, HSBC, is looking for a new London office that is less than half the size of its current site. The bank is seeking a new global headquarters of between 400,000 and 500,000 sq ft (37000 - 46500 m2) – far smaller than its 45-storey skyscraper at Canary Wharf, which spans 1.1m square feet. Having embraced remote and hybrid working to a greater extent than peers such as J P Morgan and Goldman Sachs, HSBC wants to reduce its office space by 40% globally compared with pre-pandemic levels.
Published on: March 1, 2023
Authors: Tom Hayes
Topics: HR Processes Policies and Compliance, People and Culture, The UK and European Union
Director of European Union and Global Labor Affairs, HR Policy AssociationContact Tom Hayes LinkedIn