Is good coffee able to save the workplace?
A recent survey by CoreNet Global of corporate real estate professionals about the state of office work found that flexible work arrangements are still important, but so is a good cup of coffee.
In the wake of the pandemic, higher interest rates, falling property prices, and record-high vacancies have hit the U.S. office sector hard, while most workers around the world are back at work in person.
To help things get better, more U.S. companies have put in place office rules. Still, a recent poll of corporate real estate professionals found that they agreed more on the importance of providing “good coffee” than on how many days a week employees must show up to work on-site.
CoreNet’s global members who are in charge of large companies’ real estate assets filled out the survey in March and April. Three years after pandemic lockdowns, 36% still relied on “other/flexible” work arrangements, which was the largest single category. Another 34% were required to be in the office three days a week, which was the second most popular category.
Only 11% of those who answered said they had to be in the office five days a week, and 7% said they had to be there four days a week.
That contrasts with 51% saying they were offering “good coffee” as an amenity to encourage onsite work, with the same share pointing to “a variety of workstation options” as a popular perk.
The embrace of relatively low-cost amenities comes as 56% of survey respondents reported having up to 10% of their owned or leased portfolio vacant, while 13% said greater than 30% was empty.
Financing for the office sector, meanwhile, has become a lot more expensive and hard to come by, with lenders instead under siege from borrowers requesting extensions and modifications of maturing debt. An estimated $2.2 trillion wave of overall commercial property debt is set to come due through 2027.
What’s more, updated appraisals on office properties in distressed commercial mortgage bond deals show a 50% decline on average since the bond deals were issued, according to a tally from Barclays on Monday.
Some cities have been hit harder, with reappraisals on office buildings in 2023 and 2024 in Chicago falling 66% since the loans were packaged into bond deals, and by 63% in San Francisco, according to Barclays.
That likely means good coffee isn’t the only “fix” needed for the office.
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