Office Gaining Momentum For Big Return In 2022, NAIOP Predicts

Office workers

Workers will return to offices in great numbers in 2022 and 2023, provided the U.S. economy continues to improve, according to a new forecast by the NAIOP Research Foundation.

Total net office absorption nationwide next year will be 53.5M SF, with a quarterly average of 13.4M SF, the organization predicts. That compares with the 8.3M SF of net office absorption forecast for the fourth quarter of 2021, which itself is an upward revision of 1.8M SF.

Projected 2023 net absorption is 34.3M SF during the first three quarters, with a quarterly average of 11.4M SF, NAIOP predicts.

While an increase in remote and hybrid work arrangements will probably reduce demand for office space in the long run, the report posits that any such reduction will be offset in the coming years by employment growth in office-using industries.

Thus the forecast depends on continued economic growth, which NAIOP calls plausible, given recent data. GDP continued to grow at an annualized rate of 2% in Q3 after an annualized surge of 6.7% in Q2, and unemployment is dropping from coronavirus pandemic highs.

“There is no question that the pandemic has permanently altered how and where people work," NAIOP President and CEO Thomas Bisacquino said in a statement. "Employees with longer commute times will be more likely to stay in work from home or hybrid work models. Still, with Covid-19 cases declining, more workers will feel comfortable seeing the office as a safe and better place for collaboration.”

Another factor in future office absorption will be informal pressure to return to the office, especially in highly competitive businesses.

"If you’re 21 to 35, you are nuts not to be in the office all the time,” Morgan Stanley Managing Director Chris O’Dea said on a conference call last week, as reported by the New York Post.

During that part of a career, younger workers soak up useful knowledge from more experienced workers and make in-person connections, but the effect is blunted for remote workers, according to the Morgan Stanley executive.

The future of office use also might not be five workdays a week — in the office or otherwise — but four, as a number of companies experiment with that schedule, such as Kickstarter, Shake Shack and Unilever’s New Zealand unit, The New York Times reports.

Gallup reported that employees with a four-day workweek rate their overall lives better but also that shorter workweeks mean a higher percentage of disengaged employees. What seems to matter more than the number of days at the office is the work experience itself, Gallup found.

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