The Tide is Shifting for Office Space...
- Gregg Metcalf
- Dec 5, 2024
- 3 min read
Updated: Jan 24
How and What it Means for Retention, Recruitment, and Profitability The Market is shifting for office space
As companies navigate the evolving landscape of office space, decision-makers face critical choices that directly impact employee retention, recruitment, and profitability. Demand is rising, supply is tightening, and the return-to-office (RTO) momentum is strong.
Below is a breakdown of how these shifts are affecting companies, especially those in key hubs like Midtown Atlanta. Shifting for office space
1. Demand is on the Rise
HOW-
With companies adjusting to a new work landscape, demand for office space is rebounding significantly. Recent JLL research show that Fortune 100 companies have introduced in-office mandates, requiring employees to be present on average 3.3 days per week. Leasing Activity has recovered to 86% of pre-pandemic levels, with a 0.4% increase quarter-over-quarter in Q3 2024.
2. Supply is Declining HOW-
The supply of office space is experiencing its first notable decline in over five years. In Q3 2024, net absorption increased by 10% quarter-over-quarter, reducing availability rates by 41 basis points. Additionally, there has been limited new development over the past four years and increased office building conversions (residential, hotel, etc). The supply of office buildings has been significantly limited compared to past cycles..
3. Concessions are Shifting
HOW-
With increased demand and reduced supply, the landscape for leasing concessions are also shifting as Landlord’s tighten up on both a tenant improvement dollars as well as free rent.
4. RTO (Return to Office) Momentum
HOW-
Office attendance has reached new post-pandemic highs, driven by policies from large employers that are re-emphasizing in-office work to strengthen company culture.
Source: JLL Research
WHAT THE SHIFTS MEAN
for Retention, Recruitment and Profitability-
Retention- Employees who come to the office more frequently , perform better and stay with the company longer.
Recruitment- As RTO gains traction , the attractive features of a workplace for prospective talent is becoming more and more relevant. New talent seeks not only engaging workspaces but also access to amenities that enhance their lifestyle and work-life balance (and productivity).
Profitability- While securing the strategy sooner than later for the right terms on the right space is key to maximizing ROI, the enhancements to retention and recruitment make the biggest impact on profitability.
EXAMPLE
Coming into Atlanta, Cisco e was faced with a big task. Hire 700 top talent employees in tech and consolidate multiple locations across the city into one Innovation Center. They needed to do all this and with discretion to avoid alarming existing talent.
Additionally, they had the overarching goal of ensuring they secured a strong market presence upon occupancy. A huge task, and they had an aggressively short deadline.
This was a project that usually takes 2 years to complete. They had a year to complete site selection, lease negotiation, interior buildout, and move-in.
Securing Gregg Metcalf and team, we hit the ground running and made the impossible possible. We pinned down the ideal location right fitting every need and, while building code and local law made it technically impossible, through creative lease structure and exclusive market knowledge and insight, we secured not only premier space but also premier signage on the building visible to the busiest highway corridor in the southeast.
It’s Never Too Early or Too Late to Review Your Strategy
With availability rates dropping and demand rising, companies have a unique opportunity to view their office footprint as a strategic asset for recruitment, retention, and profitability. The tightening U.S. office market signals more than just a trend; it’s an invitation for companies to adapt and potentially achieve significant gains in both workforce and bottom line.
To Contact Gregg Metcalf:
email: gregg.metcalf@jll.com
mobile: 404.661.9284
Comments