New findings from the third and final U.S. tenant sentiment study produced by BOMA International, Yardi and Brightline Strategies reveal that while COVID-19 cases continue to decline, corporate office tenants face a period of transition in their definitions and perceptions of office usage.
According to the organization, the 2022 BOMA International COVID-19 Commercial Real Estate Impact Study shows "stabilizing views" on the transformation of workplaces, alongside the growing importance placed on in-person offices, but these will ultimately look markedly different than they did before the pandemic.
For the study, more than 1,200 commercial office space decision-makers were surveyed.
While nearly 9-in-10 decision-makers continue to see office space as vital to their business operations, a consistent majority continues to support more telework, and they predict that, on average, almost 30% of workforces will remain mostly or fully remote for the next 12-18 months.
Still, almost two-thirds would prefer hybrid work schedules with at least three to four days in the office—a percentage that exactly aligns with the preferences of the employees they manage.
Additional focal points of the survey included how tenants are looking to adjust their space usage, the extent to which tenants will consider expanding or contracting their footprints, areas in which they desire more landlord investment to adapt to the “new normal” and, ultimately, what was and will be their primary reasons for embracing in-person office operations.
Henry H. Chamberlain, president and chief operating officer of BOMA International, commented:
"The office still plays a central role in the future of businesses. Because employers and employees both see value in the physical workplace, our research shows a majority of both groups want to spend more time in the office than out of it. This means commercial real estate has an opportunity to create even stronger partnerships with tenant companies to promote innovation and reinvention to shape the offices of tomorrow."
Among the study’s key findings are the following data points:
- 86% of respondents affirm their in-person office is vital to operating their business (up from 78% in 2021) but continue to indicate the future of space is still in flux.
- The number of respondents across tenant sizes reporting they will reassess space needs (70%) has increased 15 points since 2021, indicating more clarity around potential changes. Among those respondents reassessing space, 61% would reduce their square footage, amounting to 51% of all office tenants surveyed (up from 37% in 2021). Notably, 36% of those reassessing would be expanding their square footage, amounting to 3 in ten tenants in the sample.
- Decision-makers predict, on average, that 29% of their employee base will be partly or fully hybrid/remote 12-18 months from now, tracking with the 26% from 2021. Still, two thirds would prefer that hybrid/remote work be limited to not more than 2 days per week.
- 72% of tenants say they would renew their lease if it were up today (up from 38% in 2021), returning to a pre-pandemic baseline. The former majority of “unsures” have converted to “yes” on renewal as they have more clarity on their future space needs.
- 78% of tenants are seeking property owner/manager investments “outside the typical amenities,” with 33% favoring new health/wellness amenities and programming, and 23% favoring a new option for this survey for investments in amenities that specifically encourage employees to return to in-office work. This shows a sizeable segment of tenants looking for landlords to go beyond the conventional to address this specific need.
- Organizations are changing their behaviors and programming in an effort to entice more in-office work, with more than half of decision-makers reporting strong consideration of more professional development events, travel and commute stipends and working with property managers to brainstorm ways to make buildings more welcoming for, and better utilized by, tenant employees.
The 2022 BOMA International COVID-19 Commercial Real Estate Impact Study was underwritten by a grant from Yardi and developed by Brightline Strategies.
The report is the third in a series and was fielded May through June 2022 among 1,267 office space decision-makers and high-level influencers from across the United States, with respondent oversampling in the top-20 U.S. markets. The data were segmented and analyzed by industry, company size and stage of growth, office square footage, rent rate, renewal date, asset class, location and other key demographic and psychographic tenant characteristics.
“This study confirms and expands on three key concepts as we see acute COVID-19 impacts decline, and the broader after-effects emerge,” said Robert Teel, senior vice president of global solutions at Yardi. “First, that decision-makers themselves are comfortable returning to offices; second, that their peers and colleagues share that level of comfort; and third, there is considerable desire and demand for investments in technology and infrastructure that keep employees safe, and also facilitate culture, collaboration and connections.”
“We hope this study will help office owners and operators and their tenants look over the horizon when it comes to post-COVID-19 decision-making,” added Michael Broder, CEO of Brightline Strategies. “There’s an opportunity for creative organizations to partner with tenants to foster environments employees want to come back to, but also support them on some of the macro-economic challenges we’re seeing affect them, like inflation and supply chain issues.”