JLL CEO Sees a Recent ‘Uptick’ in Office Use

Article originally posted on Globe St. on April 4, 2023

Companies are not Shrinking Their Office Space, but Changing how it is Used, he Said.

JLL CEO Christian Ulbrich sees that sentiment – and investors’ heads – are turning for the better when it comes to the US office market, he said last week, appearing on CNBC’s “Squawk on the Street.”

“Office occupancy is growing across the world and across the US,” he said. “We shouldn’t be dismissing offices overall. It is the place for meeting and engaging with your company. And offices have a big role to play, going forward.”

Ulbrich said five days won’t be the standard, but rather he expects workers to be in the office three to four days per week, depending on the industry and what role a person has with the company.

He doesn’t necessarily see companies shrinking their office space, but rather, changing how it is used.

It can depend on whether they have assigned or unassigned seating matters because that indicates the frequency of being in the office.

“When space is reduced for workstations, it is often increased for meeting spaces, well-being, and innovation,” Ulbrich said. “They are upgrading their space and looking to upgrade their office by finding better buildings.”

The recent banking crisis is not playing a big factor in office, he said.

“Most companies have multiple banking relationships,” he said. “With Silicon Valley Bank (SVB), it had customers who they required to bank only with SVB.”

Recently there have been some sell-side calls on office REITs. Analysts say the recent selloff is overdone, but they do not have the transaction to make a case to upgrade their opinions.

Ulbrich said private equity will first move into the office sector on the debt side, and then on the equity side.

He added, “Prices are down across the board, no matter the building quality. But great buildings will have a use in the future, and these buildings will trade at reasonable prices. Capital will line up for those buildings.”