NewHavenBIZ

20 n e w h a v e n B I Z | M a y 2 0 2 2 | n e w h a v e n b i z . c o m New Normal New Haven office market shows some positive signs, but challenges remain By Matthew Broderick F or the first time in two years — as COVID numbers show signs of abating — employers have been cautiously bringing more employees back to the office this spring. But in the wake of 24- plus months of remote work, some employees are returning — at least initially — to workplaces that are offering greater flexibility, ranging from complete remote opportunities to hybrid models. at's good news to many employees. A PwC survey found that 72 percent of workers wanted to work from home at least two days a week even when they return to the office. However, those numbers might not be welcome news to landlords who have weathered the turbulence of the pandemic only to confront the continuing uncertainty of office demand. A national PwC survey of executives found that almost one-third (30 percent) expect to need less office space in the next three years. And 24 percent of all professional jobs in the U.S. and Canada are now available for permanent remote work, according to Ladders' 2022 first quarter "Quarterly Remote Work Report." In a city like New Haven, office demand has been impacted by dual challenges. e first has been the explosive growth of the life sciences industry, which has created far greater demand for lab space. at has incentivized the conversion of office buildings to support life science ventures or multifamily use, decreasing the overall availability of traditional office space. e second challenge was a trend for some companies to seek office space in suburban communities, said Kristin Geenty, commercial real estate broker with Branford-based Geenty Group. "When the [COVID] lockdown happened, people went to the suburbs; they wanted more space," Geenty said. "ey wanted to be closer to where people lived so employees could [more easily] come in when they returned to work." Even in the suburbs, however, Geenty sees a shrinking office footprint. Office space under 5,000 square feet is being filled, she said, but there is much less demand for larger space, as many companies are testing hybrid models. "e footprint is 50% of what it was pre-pandemic," she said. at's also put pressure on suburban office landlords, Geenty said, to offer greater lease flexibility — including features like rent abatements in New Haven office market snapshot (as of 4Q 2021) Submarket Total Inventory SF Direct Availability SF Sublease Availability SF Availability SF Vacancy Rate Vacancy Rate Previous Net Absorption Current Net Absorption YTD Avg Direct Asking Rate (NNN) Class A 2,357,265 326,573 5,661 332,234 14.1% 10.5% 378,388 346,293 $27 Class B 1,152,081 112,526 0 112,526 9.8% 8% -22,387 -42,383 $19.50 Total 3,509,346 439,099 5,661 444,760 12.7% 9.5% 356,001 303,910 Source: Colliers Downtown New Haven's office vacancy rate has increased during the pandemic, but many landlords are converting former office space to lab use to take advantage of the city's booming bioscience sector. PHOTO | COSTAR Kristin Geenty

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