Buffalo, N.Y (WBEN) - In the years following the COVID-19 pandemic, more-and-more companies and businesses are starting to see workers returning to the office. However, office occupancy rates continue to vary, depending on where you may reside across the country.
According to some rates, a number of employees continue to remain remote and hybrid workers several months following the pandemic.
In New York City alone, the number of workers reporting to the office on a given day still remains less than half of those before the pandemic. And despite a rebound in numbers since late 2021 and early 2022, some cities like New York have seen numbers plateauing.
According to the latest numbers from CBRE Upstate NY, office occupancy in the City of Buffalo in 2023 was down 15.8% from 2022. That's still better, though, when compared to the national outlook, which sees office occupancy down 18.6% from 2022. Those numbers track Class A, B and flex office spaces that are 10,000 square feet and up, and do not account for sublease space in the overall vacancy number.
While the vacancy numbers may not have gone down as much as some may have thought or planned, Sarah Cashimere-Warren, Director of Office Sales and Leasing with CBRE Upstate NY, was pleasantly surprised with the numbers, based on the personal amount of activity that she has seen throughout the office.
"It was a mixed bag, though, and I don't think you can go by just the numbers," said Cashimere-Warren on Tuesday following CBRE's annual Market Outlook event at Seneca One Tower. "I think we're shifting to more of a qualitative approach than quantitative, because it's a lot of what's happening behind the scenes. And what we're actually seeing the tenants doing, that can't be really counted in numbers, that's the drive towards quality spaces. But even enhancing B spaces as well - B spaces are the bread and butter of Buffalo - even if it's carpet and paint and changing your furniture to make it a more attractive environment across the board, people are thinking of office in a much more thoughtful way, which is a good thing."
Cashmiere-Warren says Buffalo is nowhere near the national numbers when it comes to office vacancy, which says a lot about the city being a tertiary market: It's not overbuilt, and it tends to lag behind the national trends.
When it comes to comparing Buffalo to other markets in New York State, it is faring better than a city like Rochester (17% decrease in occupancy), but falling behind the state capital in Albany, which is actually one of the strongest office markets in the entire nation.
"In terms of talking to our colleagues just up the road, it's a very different environment. They definitely were hit a little bit harder coming out of COVID than us," Cashimere-Warren explained. "We have a higher price point, and I don't really know what drives that, but being from Rochester, I think that was a market heavily driven by the history of Kodak and all that space. Maybe we're just a little more diversified here, but we also have really creative buildings with the Larkin district and Seneca One that really drives activity and can really drive those price points and rent."
Cashimere-Warren further adds with big office buildings like Seneca One Tower and Larkinville, there's a drive towards buildings that have more occupancy levels, and that's just because people are craving socialization.
"If you have a million square feet and you're sitting at like 70% occupancy, that definitely helps the numbers. It's a very healthy occupancy," she said. "They're craving being around others, and I think buildings that have that healthy occupancy to start are going to continue to see positive movement."
When it comes to office space trends going forward, Cashimere-Warren believes the days of high-density cube farms are going away, which she thinks is a positive for cities like Buffalo. Instead, she is seeing a drive towards quality, amenity-rich buildings that can allow companies to implement business strategies alongside office space as a transformative piece of the puzzle.
"I think that's a much healthier work environment, that's how people should want to be in an office space. They should be wanting to socialize and do things, and fuel creativity and foster collaboration. I think we're just becoming just a better office environment," Cashimere-Warren explained.
So what about some of the other office spaces across the city and the region that may not be seeing as much office occupancy as other spaces? How can those spaces see their numbers improve over time? Cashimere-Warren believes it may be more about working with what you have and just bringing it up a notch rather than trying to think too outside the box.
"Small improvements go a long way. Obviously hiring experts on the leasing side helps a lot. And the marketing, I think marketing is huge right now for office spaces. There's so many different avenues to put your building out there," she said. "I think the biggest thing is letting people know that you have space available, it's probably a key takeaway there. But you just try to get a step up on the competition, look at who's your competition, and try to compete and make it better."
Cashimere-Warren adds that healthcare and professional service industries are among the most active spaces. Medical spaces are continuing to account for most of the new construction, but many new office plans announcements haven't gotten off the ground because they're waiting on more tenant commitments.