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For many companies – and possibly the federal government – remote work is approaching.
Employees of big companies like JP Morgan Chase and Amazon are being called back to the office five days a week. Under President Donald Trump’s administration, thousands of federal employees have been told to return to work at a timely manner-or submit their resignations.
This may not be the good news for the workers who reward the flexibility, but it has helped to recover the business property market.
According to a report by Commercial Real Estate Management Software VTS last month, the demand for office space between 2022 and 2024 has increased by about 40 %. At this speed, VTS estimates that the demand for the national office should be inclined towards pre -level levels over the next four years.
However, full recovery of the office market is not assured. The government’s performance, which was established by Trump last month and run by billionaire Elon Musk, has asked the government agency in charge of the Federal Real Estate to significantly reduce the government’s office space impressions. Do, which will potentially flood the commercial real estate market with older. , Less desired buildings.
It was not so long that some economists had warned that the pandemic period in remote activities could launch a “urban punishment loop” in some cities. This term refers to a bottom spiral if the workers who did not need to return to the office decided to leave the expensive cities behind. With fewer residents, retailers in these cities may be closed and crime can increase, which can lead to even more exodus.
So far, it seems that in most US cities, this fate has been largely avoided.
Commercial real estate sector eliminated 2024 on a encouraging note after the Federal Reserve reduced interest rates three times Later last year, Wells Fargo’s senior economist Charlie Dorti said. The central bank then struggled to reduce inflation by discouraging borrowing and cooling the economy after increasing the rate of high levels over the decades.
The office building sector is taking advantage of the companies in which employees need to be in the office, Dograti said.
He said, “More workers are returning to the office, which I think is a reflection of the general relaxation that you have seen in the labor market.” “Workers do not have the same kind of bargaining power they once did.”
Although the labor market has been relatively strong, the employment is slowing down and its services have decreased.
In all the cities that measured by VTS, Boston and Los Angeles, as well as an annual growth in office demand, suffered an annual growth. According to the VTS, San Francisco, who saw a decline in heavy population from his tax worker and suffered several high -profile retail closures over the years after pandemic diseases, saw a significant increase in demand.
According to the VTS, New York City is the place where the maintenance has been the strongest, demanded at the pre -office level.
Scott Huma, head of American Property Sector Research in the JLL property and investment company JLL, said the rentals for the premium office in New York are now at the height of all time.
Homa said that Class A buildings, which are the latest, advanced offices that are often found in the desired palaces, have seen the most important demand. Most, employers are now looking for new, attractive office sites with additional facilities like fitness centers and food courts to bring workers back to the office.
According to Trap, a commercial real estate data company, but although most cities have avoided a large -scale punishment, almost a fifth of the office is still vacant.
Low -quality class B and C buildings are still struggling.
For example, the former Emirates Financial Center in the city’s Minyapolis, which sold for $ 200 million in 2016, was once again sold at 6.25 million last month – in less than a decade in 97 percent There is a shortage.
“The main topic in this rehabilitation cycle has been a flight for quality, namely tenants want to go to high quality places and highly desired sub -markets,” Homa said.
According to a recent trap report, a huge Office space consumer is a federal government: it is currently leasing about 150 150 million square feet of office in the whole of the United States, paying more than 5 billion annual Billion to rent Does
According to two sources familiar with the situation of the General Services Administration, the agency is expected to start eliminating about 3,000 “soft -term” lease (about 7,000 total lease across the country). Often, government leases include a period called a soft term, where the government can pay more fares, but it can choose to cancel its lease affiliation at any time. Leadership is advised to cancel 300 lease daily.
Is the spy posted on x That it has already canceled dozens of lease in the last two weeks.
If enough federal leases have been removed, it may mean more office buildings are empty.
Daryl Crete, CEO of the Easter Government Properties, a company that leased 100 buildings to the federal government through the GSA, said the federal government possibly removed hundreds of square feet old class B and C buildings. Will give
“Over the next five years, the supply of space will increase and then some of these buildings will join the retail or residential,” Crete said. “Some will put pressure on the office market in Washington DC.”
“You are going to see pressure in the office market for the next five to 10 years,” he added.
