Empty Offices and Record-Breaking Vacancy Rates in the Cities
Walking toward the post-pandemic era, people expected that the economy would resume after people back to their normal state. However, the post-pandemic rang a bell to people after they experienced the benefits of working remotely. Compared with the figure pre-pandemic, the office vacancy rate averaged 4%-5%. However, starting from the first quarter of 2020, the office vacancy rate has risen drastically. Till October 2022, the national vacancy rate rested at 16.6%.
In the epicenter for empty offices like San Francisco, office vacancies have just broken the record. According to real estate brokerage CBRE Group Inc, the office vacancy rate has just hit 25.5% by the end of September, which is six times more than pre-pandemic. It reflects the economic struggles and the latency in adapting to the market change of the tech hub offices. During this period, office operators have to reimagine the use of office space to face the decreasing demand.
According to the Bureau of Labor Statistics (BLS), the office-using sectors of the labor market used to add 51,000 new jobs in September. Nevertheless, it dropped rapidly as financial activities decelerated and lost 8,000 jobs. The economic activities of hiring are not as optimistic. It is bad news to most landlords as financial sector workers are the most likely full-time office users. While the demand for staying at the office during the traditional 9 to 5 office hours is dropping significantly, the high vacancy rate demonstrates the discrepancy between office supply and demand in this "new normal" period. It is time for landlords to reimagine the use of space wisely and better fit into the market needs.
Here are some ideas for you to use the empty offices wisely:
- Sublease the space - Renting office space is always a headache for many companies. It takes countless efforts to move from one place to another. However, renting out unused space more flexibly could foster a more energetic and collaborative work culture.
- Organize and redesign the office - As more and more companies allow their employees to work from home a few days a week, the need for designated desks might not be as critical as before. Consider changing the office space to a hot desk and allow the workers to work on any empty seats.
- Unlock the potential of the space - Office might not be a place for people to work only. Redesign the area and kick out the traditional cubicles that bar everyone. Turn the office into a multifunctional space that fits different purposes of use.
- Add some fun to it - an office space may not necessarily be a 24 hours working zone. Putting bean bags, massage chairs, or board games for your employees during their break time could help them decrease stress and build a sense of belonging to the company. It takes some investment to manage space well. Yet, the demand for land is inelastic. People need space to live, work, and network. The high office vacancy rate only shows the mismatch of land supply, but the need is always here.
It is always easier to say than to act. Catching up with the abrupt changes is an enormous task for landlords. Veery provides landlords with a solution in this difficult time. It helps bring in extra income through the platform and services, evaluate the space and operate the office flexibly. It increases market exposure and shortens the office vacancy period.
For more content about the future of work, check out some of our other articles on veeryoffices.com/blog or follow us on social media @veeryoffices.