In early 2020, a seismic shift in office attendance occurred across metropolitan areas, as office attendance contracted by an unprecedented 90%. Now, office attendance has stabilized but hovers at about 30% below pre-pandemic levels, found McKinsey’s "Empty Spaces and Hybrid Places" report.
The report projects a 13% decrease in office space demand by 2030 compared to its 2019 levels. However, in some cities, the anticipated decline could reach 38% due to a confluence of factors, most notably the surge in remote work and the challenges presented by the macroeconomic environment. “Employees still spend far less time working at the office than they did before the pandemic,” says McKinsey.
Remote work and flexible arrangements have become more than just passing trends; they are the new norm, explains Matías Fernandez, President and CEO, FIJE, Acute Talent, in MBN. Recently, Mexico’s Labor Department (STPS) introduced new regulations regarding work-from-home arrangements, which places the responsibility on employers to bear the expenses related to individuals who work remotely at least 40% of the week, as reported by MBN.
The integration of remote work has led to increased vacancy rates, making urban cores less appealing. However, companies that resist embracing a hybrid work model tend to experience reduced office occupancy rates, resulting in underutilized spaces for extended periods. In the face of decreasing demand for conventional office and retail spaces, McKinsey proposes hybrid buildings as a solution. These buildings provide a distinctive edge by offering unparalleled flexibility to accommodate ever-changing preferences and unpredictable trends. The report suggests the development of universal "neutral-use" buildings.
“The decrease in demand for traditional office spaces has prompted the repurposing of commercial buildings into mixed-use spaces that combine residential units, co-working areas, and amenities,” writes Dmytro Okunyev, Founder and CEO, Chanty, on MBN.
The "Empty Spaces and Hybrid Places" report also points to a shift in the office sector toward shorter leases, which provide tenants with the flexibility to adapt to the ever-changing needs of their businesses. Simultaneously, shorter lease terms also guard owners against uncertainties, ensuring they can swiftly adapt to market fluctuations.