More companies shift office portfolio strategy to stability and growth, finds CBRE
Forty percent of companies say having enough space is a challenge in some of their offices
August 27, 2024 — More office-using companies are shifting their portfolio strategy to expansion after a heavy focus on contraction since the pandemic, according to a new CBRE survey of 225 companies with offices in the U.S., Canada and Latin America.
CBRE’s 2024 Occupier Sentiment Survey found the percentage of office-using companies that anticipate expanding their occupied space in the next three years increased to 38% from 20% in 2023. Those planning to reduce their portfolio requirements decreased to 37% from 53% last year, and 25% expect their portfolios to remain the same.
Some companies that may have trimmed too much space in recent years or have added staff now find their offices cannot accommodate employees on high-attendance days.
While some companies are beginning to increase the amount of space they occupy, the high costs of moving and building out new space are motivating others to stay in place. A full 80% of respondents whose current space fits their needs say they are exploring or executing renewals. Those who prefer to stay in place are typically renegotiating their existing leases to take advantage of the current market conditions, which favor tenants.
An 18-percentage-point, year-over-year increase in companies anticipating expansion of their office footprints is a significant step toward a return to growth. It bodes well for a U.S. office market, which has faced many challenges in recent years. There remains a segment of the demand where companies are opting to renew their leases to forego the costs of moving, but there is now a change in sentiment favoring expansion.
Manish Kashyap, CBRE Global President of Advisory & Transaction Services
A common theme is a preference for high-quality office space. Led by large companies, 59% of companies are relocating for reasons associated with upgrading space, such as a better location, better quality space or improved employee experience.
Regardless of the decision to expand, renew or relocate, flexibility remains a top priority.
The survey also updates company office-use patterns. Fully 64% of companies report office attendance is at a steady state — up modestly from 60% in 2023 and 43% in 2022.
It’s possible we’re past the peak of the office-downsizing trend. Even as companies embrace hybrid work, they see a need for high-quality office space. The evolution of office spaces and the significance of amenities are vital in creating an employee experience that can’t be duplicated by remote work.
Julie Whelan, CBRE Global Head of Occupier Research
Amenities that companies most value include food/beverage options within walking distance (90%), proximity to public transit (87%), access to parking (85%) and sustainable building features and operations (72%).
The use of artificial intelligence (AI) is growing in commercial real estate, with 43% of all companies and 53% of large occupiers using AI — primarily for leasing and contract management, workplace experience, occupancy management, and portfolio optimization.
The full 2024 Americas Office Occupier Sentiment Survey report is available from CBRE.