Can the Office Market Survive the Great Resignation?

Office occupancy has continued to be a worry for investors, owners, operators, and even tenants who want workers back in the office. It has generally risen of late, with the first quarter showing higher rates and rents. But even then, there’s enough vacant office square footage that it could take nearly three years to absorb all of it, and that’s assuming widespread physical obsolescence doesn’t push people away and drive rents down to a point where many buildings may no longer be financially viable.

CBRE Research says that the so-called Great Resignation—an historically large voluntary departure of people from their jobs—is making employee acquisition and retention more difficult and, as a result, putting even more pressure on occupancy rates.

The numbers can be concerning, whether the “with 0.6 people available to fill each open job, as of December 2021” or “labor force participation at an all-time low and record numbers of Americans quitting despite rising wages.”

There’s also the basic question of interpreting what the numbers ultimately mean. Some people like Derek Thompson in The Atlantic argue that the “increase in quits is mostly about low-wage workers switching to better jobs in industries that are raising wages to grab new employees as fast as possible.” The end of extended pandemic unemployment support last year didn’t leave people with anywhere near enough to retire early.

CBRE notes, “Office-using jobs accounted for 22% of quits in December 2021, slightly down from the 2018-2019 average of 24%.” Technically, more people are staying put of their own accord than joining a mass resignation. Breaking that out into different groups, in the professional and business services sector, quit rates were above pre-pandemic levels, but that includes many people in entry level jobs. For technology and financial activities, quit rates were down. And none of this includes the historically large number of people starting their own businesses, according to Census data.

Instead of a Great Resignation, maybe a better term would be a Greater Reassessment. People have more opportunities, and many are taking long proffered advice to advance their personal careers, find new jobs, and make more money.

Ultimately, though, whatever the term, the issue is significant for employers. Losing staff is expensive because of the cost of finding new people and training them. The suggestions that CBRE offers are good ones.

First, address the evolving needs of employees. Whether early retirement, fear of Covid-19, needing childcare, or wanting a general better work-life balance, people’s requirements to work shift over time. 

So, second, be flexible, like incorporating hybrid work models, and communicate policy changes clearly and effectively to those who might find they make a difference in a decision to stay or go. Third is to look at how such changes will impact design in office space. Create an office that supports the new approaches to work. Then develop a culture that moves beyond a physical view of an office so people who work virtually remain connected and engaged. That opens the opportunity to spread the search for talent to any location, which reduces pressure on the hiring process.

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