The Enduring Relevance of Prime Office Space in a Post-COVID World
By Angelina Hagler
The COVID-19 pandemic brought unprecedented changes to the workplace, pushing businesses to adopt remote work at an accelerated pace. COVID reshaped the landscape of work, catapulting remote work from a niche option to a mainstream necessity. Before COVID, 17% of the US workforce worked from home, five or more days per week. After COVID, that number has stabilized at 44%. But as we transition into a post-pandemic era, the relevance and demand for office space is becoming clear. Despite the shifts in work models, office space remains a crucial asset for businesses seeking to thrive in a dynamic and competitive environment. Prime office space has seen continuous growth, despite the rise of remote work since COVID, and is being utilized by companies to re-incentivize workers to attend work in the office.
The Hybrid Work Model: A Balancing Act
While remote work has proven effective, the hybrid work model is emerging as a preferred approach for many organizations. According to recent research published by Flex Index, 99% of organizations have office space available to support their employees. In comparison, 67% of organizations maintain some expectation of in-office work for employees in their attendance policy. And this matches what worker’s themselves notice they need. 63% of employees reported that they need some time in office every week to be productive. While remote work has perks, businesses continue to recognize that the office remains a crucial space for collaboration and innovation. Hybrid policies ensure employees spend time in the office, facilitating face-to-face interactions, spontaneous brainstorming sessions, and collaborative projects. Physical office spaces are designed to support these activities, providing meeting rooms, collaborative zones, and communal areas that foster teamwork and creative thinking, all of which benefit from face-to-face interaction.
Higher Turnover Rates in Remote Work Setups
Company culture is vital for employee engagement and retention. In a remote work environment, building and maintaining a cohesive culture is more challenging. A healthy turnover rate for organizations is around 10.0% annually. Companies with hybrid work policies, average around 10.7% turnover. Meanwhile, organizations with fully remote work or employee-choice attendance policies average out at a 16.5% turnover rate. Physical, in-person work also creates healthy boundaries for workers. Such as: physical boundaries, like having a designated work space, as well as behavioral boundaries, like the commute to the workplace every day, and interpersonal boundaries, as communication is easier in person for most. Without regular face-to-face interactions, employees may feel disconnected from their colleagues and the organization. Managing performance and providing feedback can be more challenging in a remote work setup. Miscommunications and a lack of regular, informal check-ins can lead to misunderstandings about performance expectations. This lack of engagement can lead to decreased job satisfaction, feeling as though professional efforts aren’t being valued, and a higher likelihood of seeking opportunities elsewhere.
The Star of the Show: Prime Office Space
With the obvious drawbacks posed by remote work, companies are addressing these issues and incentivizing workers to return to the office, by strategically investing in prime office space. Prime office space is an even more exclusive label than A-Class office space. There are only 830 prime office buildings in the US, and by investing in prime office space, companies can create an environment that employees find attractive and motivating. Modern office spaces equipped with amenities such as ergonomic workstations, wellness facilities, and recreational areas can make the office a place where employees want to be, rather than just a place they have to be. Prime office space has been so in demand post-COVID, that these properties charge 84% more in rent than the rest of the office leasing market nationwide. This is in comparison to a pre-COVID rent premium of 60%. Post-COVID, prime office buildings had 48 million sf of positive absorption, while all other office spaces saw negative absorption of 170 million sf.
The Future of Prime Office Space
The rise in demand for prime office space reflects a broader recognition of the importance of in-person collaboration, company culture, and employee engagement. As organizations strive to strike a balance between remote work and office attendance, prime office locations play a crucial role in fostering a productive and vibrant work environment. By understanding and addressing the needs of their workforce, businesses can create office spaces that not only attract employees but also drive innovation and success in the evolving world of work.
Sources:
Remote work could keep fueling high turnover (cnbc.com)
100+ Remote Work Statistics and Trends in 2024 (flexos.work)
The Ultimate List of Remote Work Statistics: The 2024 Edition (smallbizgenius.net)
What Is Your Organization’s Long-Term Remote Work Strategy? (hbr.org)