Cushman & Wakefield CEO Brett White on Friday offered a positive long-term outlook on the commercial real estate market, telling CNBC he expects a booming economy to compensate for companies that trim their office footprint due to an embrace of remote work.
“As we think about the immediate near term … we’re looking at about a 10% to 15% reduction in demand of office space,” White said in an interview on “Closing Bell.”
“But it’s important to remember that over the next two to three years, that will be fully mitigated by the creation of new jobs that the U.S. economy and the global economy will produce,” added White, who has led the global commercial real estate firm since 2015.
White’s comments Friday came in response to a question about recent remarks from Jamie Dimon, the chairman and chief executive of JPMorgan Chase. In his annual letter to the bank’s shareholders, Dimon said JPMorgan will adopt a more open seating arrangement in its offices, among other Covid pandemic-related adjustments.
“As a result, for every 100 employees, we may need seats for only 60 on average. This will significantly reduce our need for real estate,” Dimon wrote in the letter, which also discussed what he sees as the benefits of being in the office and shortcomings of remote work.
Dimon’s insight into how the nation’s biggest bank by assets is thinking through Covid-related changes to operations comes as more people are getting vaccinated against the coronavirus. That’s seen as a critical step in bringing employees back to the office, at least part-time, after the pandemic last year prompted a widespread embrace of remote work in white-collar jobs.
The pandemic will continue to impact the commercial real estate market throughout 2021 and into 2022, White said. However, he noted that while some companies are reducing their office footprint as they adopt more flexible working policies, there are those such as Facebook that signed leases for additional space.
“The commercial real estate market is driven by multiple dynamics,” said White, an industry veteran who was CEO of CBRE from 2005 to 2012. “Right now we’ve got the lessening of space because of Covid and a different style of working … but then also, we also have this economy now absolutely roaring back and creating new jobs.”
“So, yeah, you’ll see buildings that have more vacant space this year and probably next year than they’ve had in a long time,” he added. “But in the midterm, two to three years, that space should be taken up again.”
Shares of Cushman & Wakefield rose by 1.26% on Friday to finish at nearly $17 apiece. The stock is up 14.23% year to date. The Chicago-based company is expected to report first-quarter earnings on May 6.