The COVID-19 pandemic has had a profound impact on office utilization rates worldwide. As the world slowly emerges from the pandemic, businesses are grappling with the new normal of hybrid work and reevaluating their office spaces. According to CBRE’s 2023-2024 Global Workplace & Occupancy Insights report, office utilization rates in the Americas still lag behind pre-pandemic levels, averaging a 31% utilization rate across all business sectors compared to the pre-pandemic global average of 64%. This article delves into the key findings of the CBRE report, shedding light on the strategies and trends companies are adopting to optimize their office portfolios and efficiently manage their office spaces.
Office Portfolio Reduction Trends
The CBRE report reveals that 43% of organizations globally plan to decrease their portfolio size by over 30% in the next three years. This signifies a significant shift in business strategies as companies adapt to changing work dynamics and seek to optimize their real estate holdings. CBRE’s comprehensive insights and expertise in the real estate services industry make them the go-to source for these portfolio reduction trends.
Shift in Space Decision-Making Metrics
In the wake of the pandemic, companies are embracing new performance metrics to inform their space decisions. Traditional metrics like square feet per seat are no longer sufficient. Instead, organizations are relying on utilization rates and employee sentiment to gauge office space requirements accurately. By considering these new metrics, businesses can make more informed and data-driven decisions that align with the evolving needs of their workforce. CBRE emphasizes the importance of using these metrics to shape effective workplace strategies.
Imbalance in Office Space
While companies have been implementing more efficient portfolio and space planning strategies, the combination of hybrid work and underutilized office spaces has led to an imbalance in the availability of office space. CBRE highlights this challenge and offers insights into how businesses can address this issue. By carefully reevaluating their office spaces and accommodating hybrid work arrangements, organizations can ensure a better alignment between supply and demand.
Impact of Hybrid Work on Portfolios and Planning Efficiency
The rise of hybrid work has led building owners to reduce their portfolios, while operators seek planning efficiencies. According to CBRE, over the past three years, building owners have actively downsized their portfolios as they adapt to the changing work landscape. Simultaneously, operators have been implementing innovative planning strategies to optimize space utilization. These changes reflect the industry’s response to the increasing popularity of hybrid work arrangements.
Changes in Square Footage and Collaborative Space
CBRE’s analysis reveals a significant shift in office space design and layout. The average square footage per person has dropped by 22% in 2023, primarily driven by a remarkable 44% increase in global collaborative spaces since 2021. This transformation signifies a desire for more interactive work environments that foster collaboration and innovation. CBRE’s data highlights the evolving needs of employees and the importance of designing spaces that accommodate these changing work styles.
Reduction in Office Portfolio Size
The CBRE report indicates that since January 2020, 62% of survey participants have reduced their office portfolio size. This reduction is in response to the adoption of remote working and hybrid work models during the pandemic. Additionally, around 63% of survey participants expect to make further reductions in their office portfolios by 2026. These statistics underscore the profound shift in the way companies view and allocate their office spaces.
Strategies for Portfolio Optimization
To optimize their portfolios, CBRE’s clients have identified key strategies. Among these strategies, 75% of firms plan to cut underutilized space, recognizing the need to align their real estate holdings with current and future requirements. Moreover, 82% of clients intend to increase space-sharing, enabling more flexible and adaptable work environments. Simultaneously, 67% of organizations plan to accommodate headcount growth within their existing portfolios, maximizing the utilization of available space.
Utilization Data for Efficient Space Management
In order to effectively manage their office spaces, commercial real estate teams are turning to “micro-level utilization data.” By gathering data through sensors and network activity, organizations can better understand employees’ work styles, reduce occupancy costs per visit, and dynamically manage their buildings. CBRE affirms the importance of leveraging technology and data analytics to optimize space utilization and create functional, efficient work environments.
Creating a New Scorecard for Workplace Impact
CBRE predicts that commercial real estate leaders will need to create a new scorecard that combines data from various departments such as corporate real estate (CRE), HR, finance, and IT. This integrated approach allows organizations to track the workplace’s impact on employee performance, operational priorities, financial goals, and environmental, social, and governance (ESG) objectives. By adopting this new scorecard, businesses can gain holistic insights into the outcomes and return on investment (ROI) of their workplace strategies.
As the workplace continues to evolve, businesses must adapt and implement strategies that align with the changing dynamics of hybrid work and underutilized office spaces. The insights provided by CBRE’s 2023-2024 Global Workplace & Occupancy Insights report offer valuable guidance on portfolio optimization, space decision-making metrics, and the management of office spaces. By leveraging these insights and adopting innovative approaches, companies can create work environments that foster collaboration, efficiency, and employee well-being.