There’s a lot of empty office space around the country.
San Francisco, once one of the tightest office markets, posted an office-vacancy rate of nearly 17% at the end of 2020, according to a report from Cushman & Wakefield. That’s a higher level of space available than after the Great Recession in 2008.
As the coronavirus pandemic continues to keep employees from their cubicles, many companies are re-evaluating their real estate needs. Last year, Pinterest (PINS) went as far as actually paying close to $90 million to cancel a large San Francisco lease. Other big name tech companies like Oracle (ORCL) and Hewlett Packard Enterprise (HPE) are relocating their headquarters out of the Bay Area.
The numbers and the headlines look bleak. But Mark Gibson, CEO of real estate firm JLL Capital Markets, Americas (JLL) says he wouldn’t count out either San Francisco or New York, which is also seeing double-digit office vacancies, from making a comeback.
“When you look back to various events that happened — the great recession or 9/11 or whatever it might be — you had the same questions being asked in those time frames and both cities did extraordinarily well in recovery,” he told Yahoo Finance Live.
“It's going to be important to get people back in the office”
While early on in the pandemic many companies shifted to working from home completely, Gallup found this fall that the trend was already starting to reverse. In April, it was a slim majority of workers who had very few (36%) to no employees (16%) in the office. Currently, workers say all/nearly all (46%) or some (20%) employees are on-site, while 23% say very few and 9% none.
Gibson’s optimism on offices reopening stems from the fact that he believes once the vaccine rollout is complete, getting back in the office could become a competitive advantage in terms of business execution and retention.
“This was caused by a health issue,” he said. “In order to repeatedly grow and create effectively, creating new products takes collaboration, teamwork, culture, retention of employees. It's going to be important to get people back in the office.”
While companies like Twitter (TWTR) and Facebook (FB) may be able to support a more remote workforce, other industries outside of tech will likely be looking at a hybrid work environment with more flexibility than pre-pandemic. Flexibility and hybrid options could end up a hiring and retention asset. A FlexJobs survey found 81% of employees say they would be more loyal to their employer if they had flexible work options.
Jen Rogers is an anchor for Yahoo Finance Live. Follow her on Twitter @JenSaidIt.
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