Last summer, the Building Owners and Managers Association (BOMA) International, Yardi and Brightline Strategies announced the release of results from the second in a series of commercial real estate COVID-19 impact studies at national scale. Capturing the sentiments of American tenants as COVID-19 cases began to decline and vaccinations accelerated, the study found that optimism around returning to the office has increased, thanks to growing clarity from tenants around of the “new normal” of in-office and remote working practices.
Over 3,000 commercial office space decision makers were surveyed. While a large majority of tenant decision makers still view office space as essential to their business operations, tenants recognize a shift in pre-pandemic practices. Participants predicted, on average, that less than half of their employees will work full-time in the office over the next 12 to 18 months.
“COVID-19 has created an inflection point in the commercial real estate landscape, and the results of this study show that the way forward will pose different challenges and opportunities,” said Henry H. Chamberlain, APR, FASAE, CAE, President and COO of BOMA International. “The value and vitality of offices remains strong, and there is also tremendous opportunity for landlords and operators to work collaboratively with their tenants on investments in building infrastructure, amenities, space design and ‘other features to create healthy, safe and productive workplaces.’
Some of the key findings of the study include:
• 65% of respondents believe the United States is moving in the right direction when it comes to handling COVID-19 (up 28% from the previous study in Q4 2020).
• 78% of respondents say their in-person office is critical to running their business, but say the future use of their space will change.
• Tenants anticipate a clear shift towards hybrid work options, as respondents indicated that the average number of people working full-time in the office will increase from 70% before the pandemic to 43% over the next 12-18 months. Notably, they predict that only around a quarter of the workforce (26%) will telecommute full-time/most of the time.
• The number of respondents of all tenant sizes saying they will re-evaluate their space needs (56%) has decreased by 5 points since the previous survey, while those who said they were unsure jumped to 37%, compared to 19%. Among respondents reassessing space, 48% would reduce their square footage, representing 37% of all office tenants surveyed (compared to 43% in Q4 2020).
• Nearly 2/3 of tenants (64%) think landlords and operators should invest more in health and safety infrastructure and technology to potentially mitigate future health emergencies or wellness facilities, programs and platforms that support tenant efforts to increase organizational culture, connectivity, productivity and well-being.
• 86% approve of their property management company’s response to COVID-19 so far (compared to 77% in Q4 2020), demonstrating that commercial property owners and operators deliver strong value to tenants by actively responding to the pandemic.
Additional findings explore the implications of COVID-19 and increased vaccination rates on economic/business impacts, space utilization, likelihood of lease renewals and moves, confidence in security office spaces and office return plans.
The summary of this national study is available at boma.org/covidimpact.
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