Since January 2020, Google’s parent company, Alphabet, has spent nearly $ 100 million expanding its commercial real estate portfolio in the United States, including a $ 28.5 million office that it bought in Sanville, California, at the height of the epidemic.
Most recently, Alphabet announced in January that it would spend $ 1 billion on an office environment similar to the London campus.
“We will personally introduce new types of collaborative space for teamwork, as well as create a more holistic space to improve wellness,” Ronan Harris, Managing Director of Google UK, wrote in a blog post. “We will introduce TeamPod, a new type of flexible space that can be reconfigured in multiple ways, supporting focused work, collaboration or both, depending on the needs of the team. The new renovation will also include covered outdoor workspaces to allow fresh air to work. A
The goal, Harris said, is to provide employees with a flexible space with amenities to lure them into the office, while acknowledging that many of them still want to work from home “a few days a week.”
The trend of desktop expansion is much higher than Google. In 2019, before the Covid-19 epidemic, U.S. companies purchased 60,346 commercial properties, according to Altus Group, a commercial real estate company. That number dropped to 57,174 in 2020, but recovered to 78,354 properties last year.
And in the first quarter of 2022, companies have already bought 22,423 commercial properties. If this trend continues, the number of office buildings purchased this year will surpass that of 2021.
“The numbers are consistent with Google’s growth in office space hoardings, so the Great Regency doesn’t seem to be weighing on companies that value office space,” said Ray Wong, vice president of data operations at Altus Group. “We’ve seen a lot of activity among technology companies that take up more space, not just buying it, but renting it out. Amazon and Facebook are all adopting expansion strategies. A
The United States initially lost 138.4 million square feet (MSF) of office space after the global COVID-19 epidemic was declared. The data shows that as the workforce becomes smarter, more companies start subletting their space. Amid uncertainty about what the hybrid workforce will look like, landlords and occupants have begun offering short-term lease and sublease terms, according to a 2021 report from real estate firm Cushman & Wakefield.
The small rental terms have proven to be the right move as businesses are now trying to reclaim the space.
Office sublet inventory declined for the second consecutive quarter, according to the latest Cushman & Wakefield report.
“There is no single standard for the future,” Cushman and Wakefield said. In their latest report. “Most organizations believe that the office is now the right place to cultivate culture and inspire creativity and innovation. A
Based on 90 U.S. markets tracked by Cushman & Wakefield, total leasing in Q1 2022 increased 19% from Q1 2021, and four-quarters of mobile rental activity increased 41% over the previous year. Class A office space rental accelerated more quickly; This is an increase of 47% per year. With 349 million square feet of total rent in the last four quarters, the United States has returned above its historic pre-epidemic average of 1.4%, according to the firm.
“One thing I would say is that one size fits all. If someone tells you that everyone is shrinking their space as a result of the epidemic, it’s not true, “said David Smith, head of occupancy research at Cushman & Wakefield.” Companies are rethinking the way they place. “Companies are looking to expand their portfolios. This is the right time to do it. We’ve seen it with other recessions – locking up space in the long run with good rates or discounts.”
As companies begin to understand what a hybrid workforce would look like, many are expanding their square footage to create safer and more attractive workspaces that allow more space between desks, “hot desks” (sharing offices), large lounges or breaks, and larger spaces. . Outdoor space. They are also hedging their bets that their workforce will continue to grow over time as their business expands.
“With the passing of time compared to a year ago, there is more openness to return to the office, and Google and property owners are seeing what kind of benefits people will bring back,” Wang said. “With technology companies, they’re growing and they expect that growth to happen. They have determined that they need potential real estate to achieve their strategic goals.
“Ultimately, companies focus on flexibility.”
According to Jones Lang Lasalle IP (JLL), a commercial real estate and services firm, the technology industry remained the main rental driver towards the end of 2021, accounting for 21% of Q4 activity. Tech companies added about 3.3 million square feet of leased office space in the last three months of 2021.
“It’s not just a technology company,” Wong said. “Some companies are expanding in anticipation of growth or reorganizing their space requirements for what they may need in three to five years. A
Last month, the average occupancy rate on the Kastle System Return to Work Barometer rose to 40.5%, up from 39% in November 2021. This is the highest rate since March 2020, and the Return to Work barometer has occupied all cities. (Barometer measures occupancy rates in 10 metropolitan areas, including New York, Chicago, Houston, and Washington DC)
Kastle Systems is a managed security provider for more than 10,000 companies worldwide; It uses employee badge scan data to determine workplace occupancy.
According to Peter Miskovich, CEO of JLL, in a new line, companies are now choosing to lease new or renovated buildings based on old inventory, which is more likely to be converted into residential space or senior living or assisted living facilities.
Phil Ryan, JLL’s U.S. director of research, said companies are also moving toward a co-working space or “hot-desking” model, where desks are shared based on planned office workdays.
Office usage is slowly increasing, mainly because employees’ fears of COVID-19 are diminishing and companies around the world are forcing a certain level of office presence, according to software provider Robin Powered Inc. Accordingly, which enables employees to save office hours.
According to a new report by Robin, U.S. workers work an average of 4.9 days per month in the office, up from 3.7 days in December 2021. Eric Lani, Robin’s head of product analytics, said: “… it’s good to see a slow and steady build, although the Omicron variant slowed growth in this segment in January.”
According to Robin, the total number of office workers in the United States and Europe increased by 18% in the first quarter of 2022 compared to the last three months of 2021.
“These numbers don’t tell the whole story,” Lani said in a blog post. “Despite consistent growth rates, the average daily occupancy rates in the two regions are very different. U.S. companies have 25% of office capacity, compared to 35% in Europe, which indicates that EU team members work more frequently in the office. A
The bounce rate – the percentage of people who come to the office only once in 30 days – dropped to 18% in the first quarter of 2022, the lowest since the spring of 2021, indicating that people are returning to the office more regularly, Lani.
Office traffic is not limited to employees. The average business hosts about five guests per month. According to Lani, the most common types of guests are participants at corporate events (20%) and customers (15%).
According to David Lewis, CEO of Operations Inc., a Connecticut human resources consultancy, companies that want people in their cubicles should focus on carrots, not sticks. In other words, let the employees feel the benefits of being in the office for themselves instead of forcing them to stay there.
Although the number of offices remains below pre-epidemic levels, according to Cushman & Wakefield, it continues to rebound until March, as restructured workplaces throughout 2022 could create additional demand.
According to a survey by Robin Powered, employees who had a positive experience on their first visit to the office were about 10% more likely to have a negative experience.
Office recovery will be differentiated based on building quality, class, and submarket type. To date, suburban submarkets have recovered somewhat quickly and the demand for Class A office space is high. Class A offices are the most prestigious building that competes with the average rent for a specific area for prime office users.
“Officers want a quality experience in the office,” said Smith of Cushman & Wakefield. “They want better air quality and better access to the outside and they want to be in the best place. All of these things are more important in a fast-paced work environment and to make the office attractive and productive for the employee. A
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