buyers or be appealing enough overall to overcome lower interest from buyers.
They also found that creative work and early-career training and knowledge transfer were severely hampered by the absence of in-person interaction. As companies such as Apple and X, formerly known as Twitter, move to bring employees back to the office, the commercial real estate sector could rebound. A DEMAND FOR FLEXIBILITY Americans are coming into the office less, but when they do, they work differently than they did before. After working from home alone, employees are looking for a collaborative work experience during which they can mingle and brainstorm. Successful commercial spaces should be built to accommodate those needs. Modern office spaces will need to put much less emphasis on individual cubicles and more emphasis on communal coworking spaces. An open floor plan and more conference rooms are a good place to start. So is designing with multiuse flexibility in mind. As much as the workforce wants to work communally, there will be times when space will be needed for individualized work. Flexibility goes beyond the physical space too. Many businesses will want flexible leases that can adapt to their evolving needs. In a market where commercial space is in less demand, smart owners will meet their tenants in the middle. Instead of 10- or 20-year commercial leases, leases may be as short as three to five years.
rate of employees moving for work hit an all-time low this year and is trending downward. High home values and sky-high interest rates have also locked many people in place, especially if they have an existing mortgage with an interest rate below 3%. The upshot is that many sellers, when they do get around to finally moving, may want to save every dollar they can, through tougher nego- tiation tactics or using a discount broker. •
COMMERCIAL REAL ESTATE IS A TALE OF TWO MARKETS
In New York City, one analyst found that overall office rent fell around 40%, but that drop wasn’t distributed evenly across property classes. Class A properties still yielded good revenue and remained in high demand. Class B and C properties, which are older and offer fewer amenities, experienced a precipitous drop. They’ve been hit so hard that the analyst put their value at “close to zero or close to the value of the land.” Investors who are looking at anything lower than the top tier need to carefully calculate their margins.
LUKE BABICH
Luke Babich is the co-founder of Clever Real Estate, a real estate education platform committed to helping homebuyers, sellers, and investors make smarter financial decisions. Babich is a licensed real estate agent in the state of Missouri. His research and insights have been featured on BiggerPockets, Inman, the Los Angeles Times, and other online and media outlets. Babich earned a bachelor’s degree in political science, with honors, from Stanford University.
BIG TECH IS SHRINKING ITS FOOTPRINT
Much of the shrinkage in the office market can be traced back to tech companies. Meta and Google have given up a ton of office space. In New York alone, Meta has relinquished almost half a million square feet. Abandoning office space is partly the result of economic worries. As companies anticipated a downturn, they cut their expenses by laying off employees and getting out of their leases. Yet the embrace of remote work also prompted companies to downsize their office space. Tech companies led the work-from-home movement during the pandemic, with some of them abandoning in-person work completely. However, many companies have since reconsidered their stance after “revenue per employee” plummeted.
AMERICANS ARE MOVING LESS OFTEN
Now that remote work has been normalized, moving for a new job is less common. The
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