Downtown office vacancy

[earthling]

Return to office trying to inch its way up as omicron cases drop but a long way to go. Would think pace will increase when winter subsides and if no new variant takes an impactful hold. My guess is US avg will hold steady somewhere around 70%-90% return in the long term, with a slowdown after 70% but harder to guess how long it will take to reach 70%. This summer? Next year? Years?

The sample is over 300K keycard holders across US, far more than Pew/Gallup polls, which tend to be a few thousand to maybe 10K+.



https://www.kastle.com/safety-wellness/ ... k-to-work/

[taxi]

Wow, that's a fascinating chart.

[Anthony_Hugo98]

Looks to be major costal cities are struggling. Could be a win for us should a company relocate and downsize their office footprint.

[earthling]

The report above stopped posting national average but when it was it was only a couple points better than the top 10 average. Chicago is below top 10 average. Suburbs supposedly returning faster than CBDs though. Doesn't feel like downtown KC return is much above top 10 average, can't find stats though.

And most large cities have a lot more available space than KC does, will be difficult for KC to attract anything when larger markets have far more available space and better air service.

[earthling]

Kastle return to office update, tracked by actual badge/keycard use, not polls. Some workers are now using rising gas prices as a reason not to return. Some Big Tech companies are planning an April hybrid return to office, expecting 3 days in office. Will be interesting to see how it plays out this Spring.



https://www.kastle.com/safety-wellness/ ... k-to-work/

[earthling]

A pretty interesting read about restaurant recovery mostly in urban neighborhoods but not quite biz districts including tablecloth type restaurants, afterwork lounges struggling given fewer biz related outings. Of course directly correlated to reduction in office workers and still lower biz travel. Also gives an example of a brewhouse transitioning to fast casual.

This April/May should be a telling test as more companies try to bring back workers. Google/Apple now require at least several days back in office.

https://www.bizjournals.com/kansascity/ ... space.html

What's the current policy at some of the larger KC companies like HR Block, Hallmark, Cerner, Tmobile, etc? Or your company w/out necessarily disclosing workplace.

[dukuboy1]

Commerce has wide range of options to full remote or full onsite. Flex seems to be the majority choice. Some business lines are 100% onsite again and each business line has their own governances. Some are full onsite again others flex etc. Should see more people around our offices as we get further into April and May as ppl figure out their flex schedules.

[earthling]

^Yeah would expect policies to vary by role type and roles hard to fill. I'd be surprised if we see 70% return by this summer (on Kastle graph above) but if it does happen, would expect it to remain around there for a long time or slowly increase from there. Hopefully biz travel picks up at a faster pace than office return but that's a big unknown too.

[KCPowercat]

I know a lot of KC companies that didn't decide by role but decided to go back to whatever they were back in 2/2020 as dictated by CEO on down.

[earthling]

^These companies must have roles that are easy to fill.

A friend is in a bind in hospital administration, a well paying role not particularly easy to fill. She's worked there for 15+ years but new hires (related but 'lower' roles) negotiated some remote days and she had to fight hard for one day/week remote, preferring more. They want her in daily because others are often out and she at times has to cover for others out. She's otherwise treated well and doesn't really want to leave but might.

I wonder how often this scenario occurs, where established workers are expected in office more often than new hires.

[earthling]

JLL Q1/2022 metro office report. Net absorption still mostly declining except slight downtown Class A improvement and Northland leading absorption overall, which still has unusually high vacancy over 30%.


https://www.us.jll.com/content/dam/jll- ... s-city.pdf

• Most Kansas City submarkets showed positive or slightly negative net absorption in Q1 2022. The major outlier was South Johnson County, where negative absorption accounted for 84% of the quarter’s total.
• Available sublease space is growing across the metro, with available space in South Johnson County and the CBD representing 73% of all sublease space.
• The top of the Class A market is seeing stronger leasing activity than the lower end, another marker of the continuing flight-to-quality story.

The flight to quality from B/C to less A is the best hope for new Class A construction but likely still means a net loss of office use in general.

[earthling]

Newmark Q1/2022. Some absorption improvement for all Downtown classes and significant negative absorption for S JoCo. Downtown Class A vacancy still pretty high at 20%. Report also notes expectations for more Class B to Class A upgrades during 2022.

Note that Newmark tracks more space than JLL above, which likely explains the variances and they may track different types of buildings.


https://www.nmrk.com/insights/market-re ... ORT%201Q22

[earthling]

Cushman Q1/2022 also shows a big negative hit in S JoCo absorption, representing nearly all of the metro hit. Downtown flat with still high vacancy in Xroads/CC, only Northland vacancy higher.


https://cw-gbl-gws-prod.azureedge.net/- ... 11de0df327

[earthling]

CBRE Q1 shows downtown Class A absorption improving as well but still high vacancy, all reports agree S JoCo taking a hit.



https://www.cbre.com/insights/figures/k ... es-q1-2022

Spot checking nationally, suburbs tend to be recovering with positive absorption while many downtowns still struggling with negative absorption. Analysts think full recovery should start this summer as office jobs are still growing at a faster rate than most other categories. Might be enough to offset remote work impact, maybe. There might be some winners/losers long term.

[FlippantCitizen]

What is the accepted boundary for south vs north JoCo market, 435? That puts corporate woods in the south?

[earthling]

^CBRE defines S JoCo starting slightly north of I435, see end of report. So yes, Corporate Woods in S JoCo.

[earthling]

There might be a lot of this 'flight to quality' going on in S JoCo.. from B/C to less A space or from A to less A space in a better location.
https://www.bizjournals.com/kansascity/ ... tower.html

In other cases it's simply a reduction of space next time lease renewal comes up, if anticipating long term hybrid workforce.

[earthling]

Cushman Q1/2022 national report. A bunch of markets over 20% vacancy now, including KC metro recently passing it. Several markets approaching 25% including MSP.

https://www.cushmanwakefield.com/en/uni ... at-reports

[normalthings]

Zoom’s KC office went back to in-person this week. Let’s get them downtown now!

[AlkaliAxel]

Zoom’s KC office went back to in-person this week. Let’s get them downtown now!

Isn't Zoom's office in Overland Park