Persuading Workers to Come Back to The Office Still A Tough Sell
A recent study revealed that only about 25% of office workers have returned to their workplaces. City specific numbers for Manhattan, suburban New York, Dallas, and Los Angeles are 10%, 33%, 40%, and 32%, respectively. The reasons for the delayed return of employees are the hesitance to using mass transit and social distancing, as well as responsibilities to look after children, who continue to be schooled virtually from home.
Office Concessions Today Mirror Great Recession
Rent concessions, such as free rent of more than 5% of the total lease term is not an anomaly in today’s office environment. These six-month concessions can be seen in major metro markets, such as NYC, LA, San Francisco, Chicago, Boston, and Washington D.C. This increase in free rent offering comes very close to the one witnessed during the great recession of 2009. The advantage of the office sector on the other hand are its long-lease terms, which give landlords some time until demand picks up again and helps them servicing their debt obligations.