Office Footprints Stabilize as Use of Flex Space Increases

If the doom-and-gloom headlines about the beleaguered office sector in 2023 gave you the impression that office footprints are in a downward spiral in core markets, think again.

A real-time measurement of office footprints shows that office tenants are adjusting to the reality of hybrid work patterns by stabilizing office footprints and adapting them to include more shared collaborative and flex space.

“The size of office footprints hasn’t changed as much as people thought it would have,” Ryan Masiello, Chief Strategy Officer at VTS, told Globe St.com.

“If you look at our data, it’s about seven percent across core markets, primarily driven by the fact that even if a company thinks they need less desks, they’re [adjusting to] having a lot more collaborative space,” he said.

Last month, VTS released the results of a survey of more than 400 business leaders that queried them about return-to-office strategies as well as tenant renewal and tenant acquisition strategies.

The survey, which the proptech platform is calling the Global Workplace Report, found that 62% of the companies surveyed are executing a hybrid work strategy, with 52% of the respondents reporting that their employees are coming into the office one to four days a week.

While a majority of the companies surveyed said they’re navigating a work environment that includes more use of shared or flex spaces, nearly 70% of the respondents said their overall office space is the right size to meet their current needs.

“People are saying that if 50% or 75% of my employees are coming in three days a week, you can’t create a [corporate] culture without bringing people together, so we’re going to need to have ample amounts of flex space,” Masiello said. “That’s something that is stabilizing office footprints.”

What has changed dramatically in the post-pandemic environment is the way prospective tenants evaluate office buildings.

“The best way to look at the market right now is that the entire journey has changed for tenants and landlords are very focused on understanding how that journey has changed,” Masiello said.

“In a world where office demand still is down roughly 50% in core office markets, we’ve seen searches of building websites increase by more than 200%,” he explained. “Tour requirements are down 47%. It’s a complete shift in the way tenants evaluate the market.”

“They don’t want to be dragged around, they’re not going to look at 15 buildings during the course of a relocation, they’re going to look at eight buildings,” Masiello added.

Landlords are responding to this shift by enhancing building websites, including using search engine optimization to make sure the information is readily available.

“Landlords have had to think a lot more about having 24/7 access to every suite in the building to ensure that once a tenant is working with a tenant broker, they can do that almost as well digitally as they can do it in person,” the VTS strategy chief said.