Chris Carmen  /   May 15, 2024

Because the pandemic ushered in a seismic shift towards remote and hybrid work models, tenants have been rethinking their office space needs and strategies. While some companies are doubling down on in-office collaboration, many are embracing the flexibility and cost-savings of a hybrid approach with part-time office usage.

This dramatic change in how and where Americans work has big implications for the commercial office market. Smart tenants who capitalize on these evolving dynamics can reap substantial benefits.

At CARMEN Commercial Real Estate Services, we’ve been guiding clients to take full advantage of hybrid work’s impact through strategic portfolio planning and lease negotiations. Here are some key areas where we’re helping tenants optimize:

Right-Sized Footprints When teammates are only in the office a few days per week, traditional square foot per person metrics break down. Many companies can downsize their footprint by 20% or more through measures such as:

  • Hoteling/hoteling workstations
  • Reducing private offices
  • Adding more collaborative meeting spaces
  • Increasing remote work ratios

We analyze your unique hybrid culture, policies, and projected occupancy levels to calculate an efficient, amenity-rich footprint tailored to your needs.

Hub-and-Spoke Models As commuting patterns change under hybrid work, tenants may be better served by satellite offices closer to employee population centers versus one central HQ location. We can restructure your portfolio into a hub-and-spoke approach, such as:

  • Establishing regional microhubs in key suburbs
  • Consolidating space into multiple smaller offices
  • Downsizing/exiting legacy HQ for nimbler footprint
  • Utilizing flex spaces to complement primary hubs

Not only does this reduce commute times, but allows individual offices to be properly right-sized for a distributed workforce.

Suburban Flight
 With less need to centralize for accessibility, companies can escape the premium pricing of downtown markets. We’re renegotiating suburban renewals, relocating city-based tenants to lower-cost suburban markets, and securing generous relocation packages/concessions from landlords, such as:

  • Rental rate reductions of 20%+
  • Months of free rent
  • Oversized TI allowances
  • Flexible termination rights

Flex Spaces and Short-Term Extensions Why over-commit on a long-term lease if you’re still working out your true square footage needs post-Covid? We’ve assisted clients in securing short-term extensions, temporarily expanding into flexible/coworking spaces, or executing leases with built-in contraction rights while observing the impacts of:

  • Remote/in-office rotation policies
  • Employee commuting patterns
  • Hybrid work technology adoption
  • Hoteling software/schedule optimization

The hybrid work trend has been a disruptive force across the office sector, but it also presents opportunities for tenants to realign their workplace strategy in intelligent, cost-saving ways. At CARMEN, we solely represent tenants – so you can be confident our customized real estate advisory is 100% geared towards maximizing your interests and positioning you optimally for the future of work.

Whether you need to rightsize, restructure your portfolio, relocate to lower-cost markets, or explore flex space options, we’d be happy to provide a complimentary consultation on charting the path forward. The hybrid work model is here to stay, so make sure your office aligns with your workforce’s needs and your company’s objectives.

Recommendation: Tenants should conduct a hybrid work audit/study to analyze current and projected space needs, employee commuting data, remote work policies, and more. This data-driven approach will arm you with the insights to develop an optimal hybrid workplace strategy – and leverage that to pursue the portfolio moves that optimize your occupancy cost and footprint size/locations.

At CARMEN, we guide clients through this process and utilize the findings to negotiate aggressive lease terms that extract maximum value.

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