Area Development
With the pandemic now two years old, the survey reflects an office market that remains in suspense. While office absorption increased for the first time in two years during the fourth quarter of 2021, employee behaviors in terms of office use have not returned to what they were in 2019, and it’s not anticipated that they will soon, if ever. Companies, recognizing the importance of employee job satisfaction and well-being, are embracing hybrid workplace concepts and moving very methodically in their transactional decisions. With all that uncertainty, it’s unsurprising that the projected number of new headquarters and back office facilities is low.

{{RELATEDLINKS}} The industrial market — comprised of manufacturing and distribution/logistics — is, on the other hand, very active and extremely hot in certain sectors and geographies. The continued growth of consumer online shopping has driven a need for additional warehouse space, and various trends — on- and re-shoring as the post-COVID supply chain takes shape, industry growth attributable to technological and environmental advances, etc. — explains the much higher projections of domestic expansion in industrial space.

Broadly, the factors that are most important to survey respondents are about what you’d expect. Talent-related considerations are first by a distance, as employers continue to face a shortage of skilled workers. As such, they’re offering employees more incentives and improving the quality of their workplaces to attract and retain the talent they need, which in turn has resulted in an increased emphasis on labor costs. Supply chain issues (shipping costs, raw materials availability) have moved sharply up the list — no surprise given the logistics disruptions of the last couple of years. Other high-ranking factors — energy, taxes/incentives, and so on — are more “evergreen.”

With an economy that continues to grow at a rapid pace, recovery in the commercial real estate space is expected to continue overall in 2022, and these survey results — while appropriately conservative, given the unprecedented challenges that enterprises have faced over the past two years — will hopefully be outpaced by actual activity in the coming year.