Just in time for the holiday crunch, Amazon is having labor issues. Thousands of workers at seven of the company’s fulfillment centers went on strike Thursday, demanding better wages and benefits. Amazon said it does not expect the strike to disrupt holiday deliveries.
Meanwhile, the company’s facing an altogether different problem with its office workforce. Starting in the new year, Amazon corporate employees are supposed to return to the office five days a week. But according to a report from Bloomberg, the company is delaying those plans for thousands of employees because it just doesn’t have enough office space.
Turns out, Amazon isn’t alone. Premium office space is once again at a premium.
Generally speaking, the office real estate market is still not good. Vacancy rates for all types of office space are around 20%, and higher-tier properties are still struggling to find tenants.
If your return-to-office pitch is, “Hey, you can cosplay ‘Last Of Us’ in this vaguely post-apocalyptic central business district,” your employees will prefer Zoom. But for some very fancy offices in certain locations, demand is back.
“Fulton Market, West Loop, Chicago; uptown Dallas, downtown Miami,” said Thomas LaSalvia, head of commercial real estate economics at Moody’s Analytics.
What do those neighborhoods have in common? “They have life. They have restaurants and bars, they have parks, they have walkability,” he said.
The era of big companies shedding office space is just about over, said David Smith at Cushman & Wakefield, as return-to-office plans finally leave the planning stage.
“So now they’re looking at their portfolio and saying, ‘We’re going to need to expand over the next couple of years as we grow and as we bring people back,'” he said.
Leasing activity and prices have been up this year in elite Class A offices in desirable areas. And that’s not just driven by Big Tech. “The legal sector has actually been setting records in leasing space the last couple of years,” Smith said.
That’s partly because law firms want young associates to spend more time getting face-to-face mentorship, he said.
The thing is, the number of shiny, new Class A office buildings under construction is set to decline, which could bring some life back to Class B buildings, especially those that have made post-pandemic upgrades, said Mike Watts at CBRE.
“That would be a fitness center, that would be a conference center, that would be a tenant lounge,” he said.
One obstacle, though, even if that fitness center is pretty nice: You still have to work out in front of your co-workers, which you don’t have to do at home.
