The prevalence of remote and hybrid jobs has minimized the urgency to return to in-person office work, impacting the architecture, engineering and construction (AEC) industries through shrinking office space demand. What does that mean for office construction?
Recently, our Chief Economist, Richard Branch, shared some insights with the Wall Street Journal on this shift in the office sector and its impact on the trajectory of construction.
The value of traditional office construction is expected to decline to a relatively low $82.2 billion as compared to pre-pandemic highs like $138.3 billion in 2019. Businesses that continue to support office construction are being met with challenges as the workforce continues to evolve, favoring hybrid models and increased remote flexibility.
The types of office spaces companies are creating are reflecting the evolving work models too; like the trends in construction activity of corporate headquarters building projects. Notably, instead of constructing one large space in a metropolitan area, companies are now building – or largely renovating – smaller, suburban satellite offices around the country. Companies are likely aiming to facilitate a hybrid workforce going into the office a few days a week or month for specific group-work or team meetings to collaborate.
Expectations: Declining Yet Worthy
Though challenges in the office sector are top of mind right now, this market has been adapting and transforming since it peaked in the 1980s. Finding ways to fit advancing technologies and suit hybrid workers is the latest obstacle along its evolution. Opportunities for growth may look different but this space is still one to watch.
DCN’s office sector insights from Richard Branch, Chief Economist can be found in the Wall Street Journal.