The habits of office renters have changed since the epidemic hit the global corporate landscape two years ago. The majority of people were forced to leave their offices and work from home. This judgment drastically altered the prospects for investors in the office market.
In 2022, rent growth for office space will most likely be slightly negative across the country. Working from home will continue to be popular, and the consequences of the Great Resignation will limit demand for office space in 2022.
While some organizations have begun to return employees back to work, the list of those that have not is large and unlikely to alter for some time, given the ongoing uncertainty surrounding COVID-19 and its derivatives.
Unfortunately, according to a survey by PwC and ULI, over two-thirds of real estate professionals anticipate that by 2022, fewer than 75 percent of workers will work in person at least three days per week, and that office space utilization will drop by 5 to 15%.
Many businesses, on the other hand, have been developing new ways of working in order to adapt to the new normal as it relates to their business.
They’re now permitting various sorts of hybrid working, albeit this does result in a reduced, but not non-existent, demand for office space per company. Of course, one solution is for enterprises to share space. The good news is that because many employees can now work in hybrid models, the office market is expected to be rocky but steady for the foreseeable future.
As a result, as an investor, now is an excellent time to enter – or re-enter – the office real estate market and consider how it can benefit you in the long run. However, before making any decisions, keep these patterns in mind.
The first trend is the release of pent-up demand. Now that people are able to return to their normal routines and the global economy is recovering, reports indicate that there will be a surge in demand for office space, owing to the unmet need for businesses to have structured spaces to increase productivity and focus on tasks collaboratively following the pandemic.
The second trend is that tenants are seeking more innovated spaces. Modern office environments have transformed and evolved to encourage employee creativity and collaboration. This was already happening prior to the pandemic, as workplace culture evolved in response to new business pressures.
Offices will still exist in 2022, but they will serve a different purpose. Rather than being taken for granted as a place where employees must report every day, they will be transformed into hubs dedicated to fostering creativity and interaction.
However, with all this said and done many people are making the move to come to Florida and it shows. According to data by the United States Census Bureau, Florida trailed just Texas in population growth from 2020 to 2021, while the country experienced its worst growth rate in history. Between July 1, 2020, and July 1, 2021, the population of Florida increased by 211,196 people, bringing the total population to 21,781,128, according to census projections. Not to just mention population growth, but as well as employment growth as well.
-Employment sectors in Orlando showing the fastest signs of growth in 2021 include leisure and hospitality, construction, education and health services, and professional and business services, according to the BLS.
-The Orlando Business Journal reports that over the three years prior to the pandemic, job growth in Orlando was 11% with nearly 129,000 new jobs added to the economy.
-Average employment in Orlando is projected to grow by 19% by 2030, nearly double the rate of the U.S.
With the intense growth Florida is having, it’s safe to say that office space within Orlando will see a boom in needs. Population seems to be proportional to space needs and due to Orlando becoming increasingly metropolitan and seen as a city that is a hub of growth, the need for office space is becoming increasingly transparent. This would probably offset any negative friction pushing back on the office market.