A new report suggests the U.S. office market is starting to turn a corner with the number of leases increasing for the first time in a year while in-office attendance policies are being implemented by a growing number of companies. Boston, San Francisco and Silicon Valley are seeing more lease activity, with increases of 25%, 16% and 59%, respectively, according to the latest quarterly office outlook report from real estate services firm JLL.
JLL says 1.5 million workers faced new return-to-work policies in 2023. While occupancy is about half of pre-pandemic levels on the busiest in-office workdays – Tuesday and Wednesday – the firm expects that number to increase to 80% by the end of the year. At the height of the pandemic, occupancy in 10 major metropolitan areas was just 14%, according to Kastle Systems, which uses keycards, fobs and apps to track usage.
The technology and insurance industries, telecom companies and law firms are leading the way with new attendance policies and the JLL report says about 1 million more workers will be expected to follow new rules. The 10 largest tech companies have already put attendance policies in place, according to the report, but some of the new rules cover only two days a week.
“Significant shifts are also beginning and expected to continue for federal government agencies, which have been mandated to formalize office attendance policies by year-end,” the report says. Early adopters are the Department of Veteran Affairs, the Federal Emergency Management Agency, the Federal Deposit Insurance Corporation and the Department of Education.
“While the office market remains in a state of transition currently, strength has been evident in select segments of office throughout the pandemic, and that set is slated to expand as the recovery progresses,” the report concludes.
