Can the office market survive the great resignation?
Office occupancy continues to be a concern for investors, owners, operators and even tenants who want workers back in the office. It has generally increased lately, the first trimester showing higher rates and rents. But even then, there are enough square meters of vacant office space that it will take nearly three years to absorb it all, and that assumes widespread physical obsolescence doesn’t push people away and doesn’t drive rents down so much that many buildings may no longer be financially viable.
CBRE Research says the so-called Great Quit — a historically large voluntary departure of people from their jobs — is making it harder to acquire and retain employees and, therefore, putting even more pressure on occupancy rates. .
The numbers may be concerning, whether it’s “0.6 people available to fill each job vacancy, as of December 2021” or “labour force participation at an all-time low and record numbers of Americans quitting despite rising wages.
There is also the fundamental question of interpreting what the numbers ultimately mean. Some people like Derek Thompson in Atlantic argue that “increasing quits are mostly about low-wage workers moving on to better jobs in industries that raise wages to attract new employees as quickly as possible.” The end of extended pandemic unemployment assistance last year did not leave people with enough money to retire early.
CBRE notes that “desk-using jobs accounted for 22% of quits in December 2021, down slightly from the 2018-19 average of 24%.” Technically, more people are staying put on their own than joining in a mass resignation. Breaking this down into different groups, in the professional and business services sector, quit rates were higher than pre-pandemic levels, but that includes many people in entry-level jobs. For technology and financial activities, quit rates have declined. And none of that includes the historically high number of people starting their own businesses, according to census data.
Instead of a big resignation, maybe a better term would be a big reassessment. People have more opportunities, and many are following long-held advice to advance their personal careers, find new jobs, and earn more money.
Ultimately, however, whatever the term, the issue is important for employers. Losing staff is expensive due to the cost of finding new people and training them. The suggestions offered by CBRE are good.
First, meet the changing needs of employees. Whether it’s early retirement, fear of Covid-19, need for childcare or a better overall work-life balance, people’s demands for work changes over time.
So second, be flexible, such as incorporating hybrid work models, and communicate policy changes clearly and effectively to those who might find they make a difference in the decision to stay or leave. Third, consider the impact of these changes on office space design. Create an office that accompanies new approaches to work. Then build a culture that goes beyond a physical view of an office so people who work virtually stay connected and engaged. This opens up the ability to expand the talent search to any location, reducing the pressure on the hiring process.