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Can good coffee help fix the office? Corporations think it helps.

By Joy Wiltermuth

Companies view decent coffee as a top amenity in encouraging workers back to the office. The U.S. market still needs a bigger fix.

Can good coffee save the office?

Flexible work arrangements still matter, but so does a good cup of joe, according to a CoreNet Global recent survey of corporate real-estate professionals on the status of office work.

The U.S. office sector has been reeling from higher interest rates, plunging property prices and record-high vacancies in the wake of the pandemic, even as workers elsewhere in the world are largely back in-person.

To help turn things around, more U.S. companies have rolled out office mandates. Still, a recent survey of corporate real-estate professionals found more agreement on providing "good coffee" than how many days a week employees must report to work onsite.

The survey, which gathered responses in March and April from CoreNet's global base of members who oversee real-estate assets of large corporations, found that 36% still relied on "other/flexible" work arrangements four years since pandemic lockdowns, the largest single category, while another 34% were mandating three days a week in the office, the second-most popular category.

Only 11% of respondents required five days in the office, while 7% were mandating four days a week.

That contrasts with 51% saying they were offering "good coffee" as an amenity to encourage onsite work, with the same share pointing to "a variety of workstation options" as a popular perk.

The embrace of relatively low-cost amenities comes as 56% of survey respondents reported having up to 10% of their owned or leased portfolio vacant, while 13% said greater than 30% was empty.

Financing for the office sector, meanwhile, has become a lot more expensive and hard to come by, with lenders instead under siege from borrowers requesting extensions and modifications of maturing debt. An estimated $2.2 trillion wave of overall commercial property debt is set to come due through 2027.

What's more, updated appraisals on office properties in distressed commercial mortgage bond deals show a 50% decline on average since the bond deals were issued, according to a tally from Barclays on Monday.

Some cities have been hit harder, with reappraisals on office buildings in 2023 and 2024 in Chicago falling 66% since the loans were packaged into bond deals, and by 63% in San Francisco, according to Barclays.

That likely means good coffee isn't the only "fix" needed for the office.

Related: Former CEO Howard Schultz says Starbucks needs to overhaul its customer experience

-Joy Wiltermuth

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.


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05-07-24 0800ET

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