How Much Office Space Do We Need Post-COVID?
According to Greater Cincinnati commercial real estate and management firms, one of the biggest topics of discussion right now is "How much office space do we need post-COVID?" That may not be sorted out for a couple of years.
As companies decide whether to go totally remote, require employees back in the office full-time or some combination of the two, they are trying to sort this out with office building owners and managers.
"I haven't heard a ton of definitives as yet," says CEO of Neyer Management John Neyer. "I think people are seeking data points, both the internal and external. The internal being, what do the employees want? What are they willing to do? What do they feel safe doing? The external being, do I have a lease agreement? Am I coming together on my terms?"
Another tenant concern might be, "Am I confident that the building is proving the safest environment it can be?"
Research Director for Colliers International Loren DeFilippo reports on Southwest Ohio. "Technology companies like Cincinnati Bell we're hearing are looking at going a good percentage to totally remote," he says. "And then, kind of a national trend, where a lot of sublease came out on the market, a space companies were paying rent on but no longer needed, so they tried to find a sublease."
DeFilippo says he's heard Luxottica, based in Mason, is taking some of its sublease space back.
In 2020, Colliers International saw a loss of a half-million square feet of occupancy. DeFilippo says so far this year it's a negative 270,000.
According to the most recent report, 15% of the Colliers International office space is vacant in Southwest Ohio, up a full percentage point. DeFilippo says that's not much of an increase and is comparable to other areas the same size.
That makes sense because most building owners want to work with their tenants, according to Neyer. "If you had an existing space 18 months ago, 90% of that is still an existing space today," he says.
But, "People aren't making a lot of 10-year lease decisions right now because they might need less space because a lot of their employees want to work from home; or more space if their employees all want to come back. Some thrive in that culture," he says. "But all of a sudden they need 30% more square footage to de-densify."