Hybrid work could result in 20% less demand for office space

Global office demand could drop by between 10% and 20% as companies continue to develop policies around hybrid work arrangements, a Barclays analyst recently stated on CNBC.

Long-term leases have propped up the office market since the Covid pandemic struck. When those leases expire, companies will have the option of reducing the amount of office space they rent.

With two years of experience managing remote work environments enabled by technology advances, companies looking to cut costs have more confidence to trim real estate commitments. Class A properties in good locations are the most desirable, and are well poised to retain tenants.

Older office buildings and those in less desirable locales, on the other hand, may be challenged to hold onto tenants and attract new ones.

The Architectural Billings Index measures the general sentiment of U.S. architecture firms about the health of the construction market by measuring 1) design billings and 2) design contracts. Any score above 50 means that, among the architecture firms surveyed, more firms than not reported seeing increases in design work vs. the previous month.