Photo by Alex Kotliarskyi on Unsplash

The Death of the Office Building? Office Leases Plunge Amid COVID-19

There’s not much that the COVID-19 global pandemic has not touched, from the way we learn, work, play, exercise, and everything in between. One of the biggest changes has been the shift to working from home.

The office, filled with people working in close proximity, eating together, using a communal bathroom and coffee pot, sharing a phone, and generally not being able to remain six feet apart from co-workers and clients/customers, quickly became public enemy #1 of health officials trying to fight the coronavirus.

Soon enough, millions of Americans found themselves working from the comfort of their living rooms, kitchens, basements, even their beds.

Gone are the days of co-workers gathering in the conference room, blowing out candles (the horror) on a cake from HR to celebrate an employee’s birthday, or gossiping together over a cup of coffee in the breakroom. Today, the office can be anywhere.

A Gartner survey found that 80% of company leaders plan to allow employees to work remotely at least part of the time when the pandemic ends. This decision comes with good reason as data shows that 95% of respondents to a FlexJobs survey said their productivity is higher or the same while working from home. What’s more, 51% report they are more productive when working remotely.

This is, unsurprisingly, devastating news for office leases, which traditionally make up the biggest commercial property market in the U.S. During the first month of 2021, figures show that office vacancies in Manhattan jumped to a century record of more than 15% as the global pandemic continues to freeze new rental deals and sublease openings grow rampant.

According to commercial property firm Savills, new office leases in the last quarter of 2020 dropped 64% from the year before.

Bloomberg News reports that as of late 2020, there is 68.4 million square feet of office space sitting empty in the Big Apple.

The prices of office leases are also experiencing a sharp decrease as the average rent for the highest-quality offices fell nearly 9%.

As Americans get more comfortable working remotely (steps away from the fridge and coffee maker, the option to leave the suits and real pants hanging in the closet, and not worrying about the boss looking over your shoulder), it’s hard to tell if office leases will experience a resurgence in a post-COVID-19 vaccine world.

Is the office building dead or just sleeping? Only time will tell. What do you think? Do you plan to return full-time to the office? (or maybe you already have) Or has COVID-19 converted you to a full-time WFH-er? Personally, I am completely content working from my couch for the rest of time.

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