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CoStar Predicts: Return to Office Accelerates

The long-anticipated return to the office will accelerate in the coming year, according to a CoStar analysis, as companies begin making real estate decisions and eventually begin calling people back from remote work.

Nearly two years into the health crisis, office owners have seen sluggish demand because of several factors, including concerns about new variants of COVID-19. The omicron variant in particular is causing uncertainty in business planning in December, but the pandemic has shown that the picture can change six months into the future.

The rate of return to the office was less than 37% of pre-pandemic levels as of November, according to Kastle Systems, though CoStar analysts estimate that figure will reach 60% by the end of 2022. That’s the equivalent of three days in the office per worker each week, but it’s enough to slow demand losses for landlords.

Workers may not embrace a large reduction in their office space as a trade-off for flexibility as polls indicate employees strongly favor having assigned seating. Personal workstations make up one-third to half the space in a typical lease, and many people on hybrid schedules prefer to be in the office midweek.

Many firms planning hybrid schedules say they will have all employees in the office on the same days of the week to maximize collaboration, teamwork and other benefits of in-person work.

Those factors may challenge tenants to make significant cuts to their real estate footprints.

Originally published on CoStar, Dec. 20, 2021.  Author: Ryan Ori

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