Don’t Listen to the Headlines! Office Rebounding Slowly as Companies Navigate Period of Experimentation
The advent of remote work has transformed the office landscape of most major metros across the U.S., but as Downtown Chicago’s hustle and bustle continues to reemerge, certain trends—and certain neighborhoods—are leading the rebound.
Illinois Real Estate Journal recently spoke with JLL Executive Vice President of Brokerage Jamie Wallenberg and Cresa Senior Vice President Michael Marrion to discuss the current state of the market and interestingly, they both came up with one conclusion: the state of the market is much more positive than the headlines reflect.
The last six months have reflected significant leasing activity of upwards of three million square feet, whether it be growth or rightsizing in terms of footprint, as companies continue to look at this as a tool to continue to drive employees back to their office space. And within the office? Employees are returning. In fact, Chicago, compared with all the gateway cities, has seen one of the highest changes in return rates in the nation since the beginning of the year, at over 50%, based on a report by Kastle Systems. With a job market that’s less frothy, people are realizing in person face time and collaboration is more important than ever.
But the numbers won’t continue to rise without the incentive of experience. Quality over quantity is still being prioritized when it comes to leasing office space as highly amenitized, smaller footprints are favored over those stiff and cubicle-dense with more square footage.
Wallenberg said it starts with addressing two questions: the reason behind employees’ reluctance to go back and the means by which the issue can be resolved. It’s all about the experience. JLL is seeing their clients, as well as others in the market, try to manage what that experience looks like from employees’ morning commute to their lunch break and ending with errands or happy hour on their way home.
“We’re not trying to entice them to come into a designated seat, but rather take part in the entire experience,” Wallenberg said, which does, of course, include the work being done within the space.
Increasing productivity through a positive, exciting experience that is looked forward to, rather than dreaded. That’s the objective, and part of that is creating a space within the office footprint that’s equally as vibrant and productive as the footprint itself, specifically of the West Loop and Fulton Market.
For outdated buildings, and those unwilling to evolve, Marrion said they’re in trouble. More and more are going back to the lender or traded and sold. 161 N. Clark and 200 S. Wacker are both examples of buildings changing hands due to users’ flight to newer, amenitized space.