Office tenants trying to anticipate return-to-office trends as they adjust footprints in lease renewals just had another cloud added to the fog of uncertainty shrouding predictions of a robust rebound in office work.

After weeks of steady increases, Kastle Systems’ 10-city Back to Work Barometer recorded a slight decrease in average office occupancy, to 42.8% from last week’s level of 43.1%.

The barometer, which tracks card-key swipes of office workers in 10 of the largest US markets, had risen from 40% in Kastle’s March 23 report to 43.1% on April 6. Kastle’s last three reports of the average appear to show a plateauing of the return-to-office trend, with the average hovering between 42% and 43%.

According to this week’s report, this leveling off is happening in markets across the US: half of the 10 metros surveyed for the April 18 report notched a reduction in their office occupancy percentage, including a dip of 1.5% in Washington DC, a 1.3% decline in New York and a drop of 1.2 percent in San Jose.

Kastle also reported fractional reductions in Philadelphia and Austin in this week’s report. Dallas, Houston, San Francisco and Los Angeles had fractional gains, none more than 1%; Chicago’s occupancy level remained unchanged at 37.8%.

There could be lots of work for dealers, movers and installers shortly. Leases for 243 million square feet of office space are due to expire this year, the largest amount to hit the market since JLL began tracking expirations in 2015, forcing companies to decide on their office footprints while trying to anticipate how many workers ultimately will return to the office.

The deluge of expirations, nearly 11 percent of the overall office space in the US, has building owners—and banks holding their loans—sweating out a reckoning that did not occur during the worst part of the pandemic, when people chose to work from home and offices emptied, due to long-term leases that forced tenants to continue paying office rents.

Also, many office tenants whose long-term leases expired during the past two years negotiated one- or two-year extensions with landlords so they could wait out the pandemic without having to make tough choices about office footprints, according to a report in The Wall Street Journal.

Brokers are reporting that a growing number of tenants now are deciding to shrink their office footprints in new leases because they’ve adopted hybrid strategies for their workers as a compromise between remote work and return-to-office edits, WSJ said.

The wave of office lease expirations this year represents a 40% increase since 2018. CRE analytics firm Green Street is projecting that companies opting for hybrid work models will cause a 15% drop in the demand for office space, the WSJ report said. 

Future Forum, a consortium launched by Slack with Boston Consulting Group, MillerKnoll and MLT to “help companies reimagine work in the new digital-first workplace”, has released the latest findings from its global Pulse study, which shows that employee experience scores are plummeting for knowledge workers who have been asked to return to the office full-time and for those who do not have the flexibility to set their own work schedules. More than a third of knowledge workers (34 percent) are now working from the office five days a week, the greatest share since Future Forum began surveying in June 2020. With this shift, employee sentiment has dropped to near-record lows, including 28 percent worse scores on work-related stress and anxiety and 17 percent worse scores on work-life balance (compared to last quarter).

There is no sugar coating it for office landlords: as employees return it is on hybrid work schedules.

 

“There is increased demand for unique, high-quality space that caters to creative and collaborative knowledge workers. Firms will want to have a landing pad for these teams while understanding flexibility will be an integral part of workplace strategy.”

If the next generation of political chancers and schemers want to live up to their image, they really need to work on their office furniture.

For those tired of Zoom calls but who don’t have the ability to meet with their team in person, WeWork hopes to have a solution for you: live meetings with holograms. Though it might sound like science fiction, WeWork is dead serious about it. The company has partnered with Canadian firm ARHT Media Inc. to provide hologram technology at up to 100 WeWork buildings. The first phase of the partnership delivered holodecks at sixteen locations worldwide in the third quarter of 2021.

The coworking provider currently operates three locations in suburban Atlanta. Real estate investment firm 33 Degrees announced Tuesday it is making a significant investment in Thrive, allowing the coworking company to expand to 500 locations in the United States and Canada.

MillerKnoll, Inc. announced yesterday new sustainability goals for 2030 to make a positive impact on the planet. The goals are targeted at reducing the company’s carbon footprint, designing out waste, and sourcing better materials.

Revenue increased 119% for Fiscal Fourth Quarter, 21% for Fiscal Year Ended January 31, 2022.