At the end of 2024, the U.S. office market began to turn a corner, with firms seeing positive absorption for the first time in years and leasing volumes establishing new post-pandemic highs.
Office demand also closed the year at 64% of pre-pandemic averages, 16.4% higher than at the end of 2023 and 39.1% higher than the end of 2022, according to real estate insight firm VTS. At the current pace of growth of nine percentage points per year, the VODI — an indexed comparison of office demand relative to average levels in 2018-2019 — would take until approximately December 2028 to reach the pre-pandemic baseline of 100, according to the firm’s quarterly report.
But improvement in demand is not due to the job market, which has actually been cooling since mid-2022, VTS says. Instead, the improved outlook appears more closely tied to the steady decline in remote work as occupiers double down on their return-to-office mandates. The share of workdays done from home has fallen significantly from the pandemic peak of 60%, per the firm’s January report.
“The increase in new demand for office space — even amid a cooling labor — reflects growing clarity around hybrid and remote work norms, giving employers more confidence to pursue their office space needs,” VTS says.
As organizations adapt to a post-pandemic environment, the hybrid model has emerged as the preferred approach, with 92% of workplace policies now including hybrid programs, according to CBRE. That figure represents a significant increase from 71% just three years prior, underscoring a shift in workplace dynamics, “where flexible and in-person connectivity coexist,” the firm said in a Jan. 21 report on effective hybrid programs.
Most organizations encourage some level of office attendance, CBRE says, with the C-suite saying participation in shared experiences with colleagues increases engagement and organizational loyalty. But employee demand for flexibility remains high, life stages and work styles, CBRE says.
“There's this tension of companies not wanting to celebrate the at-home, flexible hybrid pieces much, while there [are] also individuals trying to hold on to the flexibility they have and resistant to celebrating that in-person [benefit],” Izzy Cannell, co-lead of workplace insights and advisory services at occupancy analytics firm VergeSense, told Facilities Dive.
Despite high-profile mandates for full-time office attendance from companies like Amazon, the drive to enforce full-time office attendance seems to be waning, occupancy analytics firm FM:Systems says in its 2025 Inside the Workplace report.
Industry statistics remain closest to each other in the “mostly office” hybrid model, suggesting that this approach is a justifiable default position that balances executive priorities for in-person time with moderate flexibility, CBRE says. Office attendance has reached a plateau over the past 12 months and many companies report they've reached a steady state of operation, supporting the idea that companies are settling on hybrid models, per the report.
“There can be a middle ground, where companies are really educating themselves on, ‘What are those activities that are done better [in the office]?’,” Cannell said. “How can we as a business do that well, without necessarily requiring people to be in for eight hours, five days a week.”
Cost-saving opportunities require careful considerations
The adoption of hybrid policies has enabled companies to resize their real estate portfolios and to implement more on-demand solutions for employee accommodation on site, CBRE says. Nearly 80% of respondents to CBRE’s 2024-2025 Global Workplace & Occupancy Insights survey said that portfolio optimization is a goal for supporting hybrid work. By comparison, 71% named collaboration and 59% named cost avoidance as a goal of hybrid work.
“The economic impact within organizations is significant,” CBRE says in its report. “Assuming a 10% space reduction is achieved across the average managed portfolio of 7.5 million [real square feet], at U.S. average rental rates, that would reflect an annual rent reduction of $25-$30 million.”
While average capacity usage remains relatively low, it is equally important to consider peak capacity usage and average daily peak throughout the year, VergeSense says in its 2025 Workplace Occupancy and Utilization Index. Considering all three metrics provides a comprehensive understanding, enabling organizations to make informed decisions about optimizing space, the company says, noting that high attendance rates do not necessarily equate to high utilization.
“These decisions that our real estate teams make are huge-dollar decisions. They are emotionally and mentally impacting the employee and culturally impacting the company, and they are not made lightly,” Cannell said.
Understanding attendance patterns and employee preferences is crucial for organizations that intend to optimize workplace strategies, CBRE says. The firm notes two key metrics that can aid decision making: daily show-up rate and vibrancy and the distribution of individual show-up rates.
Achieving the right balance in office attendance, by adjusting daily show-up rate and distribution of that demand across the week, is critical to creating an exceptional on-site experience, per the report. “A sweet spot for buzz and energy occurs when at least two-thirds of an office is occupied,” CBRE says.
Hybrid programs have several common characteristics contributing to their effectiveness, perhaps most notably a priority in investing in technology tools that can help ensure employees have the necessary resources to facilitate collaboration — both remotely and in the office, CBRE says.
“Another piece of the stabilizing environment is that real hunger for making decisions, but wanting the right tools, models and products to make those decisions confidently and quickly,” Cannell said.
This is evidenced by the 85% of organizations that reported using a workplace management solution in a survey of 1,000 HR, finance, facilities and real estate business leaders by FM:Systems. Compared with 69% that said the same last year, this data highlights the evolution of workplace management technology from a “survival tool to strategic investment,” FM:Systems says in its report.
In addition, 62% of hybrid programs provide information about available office amenities and services, allowing employees to make data-driven decisions about where they work and what resources are at their disposal, CBRE says. But both employees and managers still require significant training, says the firm, noting that addressing the gap will be crucial for organizations looking to optimize hybrid work strategies, ensure productivity and improve employee satisfaction.
