Elysium HQ in New York, NY by FLOAT STUDIO. Image: Aaron Thompson

Our recent analysis of the Archinect Business Survey highlighted concerns among architects that their business health has been impacted by the ongoing adoption of remote and hybrid working patterns across the U.S. in the wake of the COVID-19 pandemic. We explore in more detail how the supply and demand of workplace real estate has changed in recent years, where it is heading, and what opportunities and challenges it presents for architects.

As part of our analysis of the results taken from June’s Archinect Business Survey, we recently set out five big factors behind the architecture industry’s economic slowdown. To many, the main antagonists were not surprising. According to our analysis, architects believe high interest rates, high construction costs, and inflation on business overheads to be the key drivers behind the industry’s current struggles.

While the COVID-19 pandemic featured much less in the responses to our survey, our analysis posited a theory that the legacy of the pandemic is a common factor behind many factors mentioned more explicitly by survey respondents. For example, the high costs of construction have been driven largely by material prices, which saw rapid rises during the pandemic as a result of supply chain disruption and an explosion in demand following the easing of lockdown measures. Midway through 2024, such prices are still far above pre-pandemic levels.

More broadly, the economic shock of the pandemic is recognized as a cause of inflation across the board, raising the cost of running an architecture business. Pandemic-legacy inflation has also served as a driving force behind interest rate rises over the past two years.

While many respondents did not explicitly link interest rates, construction costs, and business inflation to COVID-19 effects, the pandemic was not entirely absent from our survey results. Many respondents highlighted the pandemic-era shift to remote and hybrid working, and its lasting effects, as a factor in the architecture industry’s current economic slowdown. There is good reasoning for this.

It is worth noting first that when reflecting on the continuing impact of hybrid and remote work patterns on the architecture profession, we are referring to work patterns in the wider U.S. economy, not in architecture studios themselves. This does not mean that architecture studios are exempt from changing work patterns. On the contrary, a survey carried out by Archinect in late 2021 found that over half of architecture offices were either working remotely by necessity or giving staff the choice of whether to work in the office, remote, or hybrid.

The trend appears to have continued long after pandemic-era measures necessitated them. Across 2022 and 2023, our ongoing Meet Your Next Employer series has occasionally asked firms about their working arrangement, with several telling us that they were operating on a hybrid schedule. Meanwhile, a 2023 survey by students from the Harvard Graduate School of Design concluded that “architects believe that the vast majority of architectural tasks can be done ‘entirely or almost entirely remotely.’”

Bigger corporations that did a lot of work to get people back in the office after COVID have completely backed off on doing any further work. — Archinect survey respondent

As noted, however, this article is not about the impact of remote work on how architecture studios operate. Rather, it is concerned with what architecture studios are, and increasingly are not, commissioned to design.

Several respondents to the Archinect Business Survey identified the legacy of remote working as a factor behind their economic challenges, with clients particularly hesitant to commission new office projects. Our previous analysis quoted the owner of a mid-sized firm in Chicago who told us that their clients are exhibiting a “hesitation to spend big on space they are unsure will be used by the employee base.”

Elsewhere, an architect in a small New Jersey firm told us: “Bigger corporations that did a lot of work to get people back in the office after COVID have completely backed off on doing any further work,” before adding that clients “spent a lot of money coming out of COVID to install AV for hybrid working and install collaboration areas to support free addressing instead of traditional office and workstation ownership. Now they are cutting back on spending, because employees still aren't coming into the office.” The owner of a medium-sized firm in Irvine, California, put it simply that clients are “standing on the sidelines until vacancy reduces.”

Our respondents’ observations are supported by data. In 2023, the U.S. Census Bureau conducted monthly surveys of 60,000 households and found that 10% of U.S. workers worked a hybrid schedule, and another 10% were fully remote. A Pew Research Center survey from 2023 found that 35% of workers with jobs that can be done remotely are working from home all of the time, with an additional 41% working a hybrid schedule.

The future of these trends is predictably unpredictable. In a 2024 article for The Economist, Stanford University economist Nick Bloom believes we will witness a so-called “Nike swoosh” trend, with a steady long-run increase in the number of people working remote or hybrid schedules. However, a separate article by Bloom in the Harvard Business Review also notes that while U.S. executives expect remote work to keep increasing, the increases will be marginal, rising from 14.1% of employees now to 16.3% by 2028 in the case of hybrid working, and 10.2% now to 11.2% by 2028 for fully remote working.

Even a change in working patterns as modest as those predicted by U.S. executives is enough to sustain a remarkably different working landscape to that seen before the pandemic. Chief among these changes is a decline in demand for office space, as identified by our survey respondents.

The U.S. workplace will be forced to adapt to new trends and demands from the U.S. worker.

A 2023 analysis by property consultant Knight Frank found that 50% of large international firms expect to reduce their existing office space over the next three years. Elsewhere, a study by McKinsey has found that post-pandemic vacancy rates have risen by 13% in cities around the world and predicts that the demand for office space in cities they studied will be 13% lower in 2030 than it was in 2019. Meanwhile, a CBRE analysis estimates that approximately 2 billion square feet of office space in the U.S. is being underutilized.

Not all office space is created equally, however, and exceptions to this decline in demand exist. As CBRE notes, cities such as Miami, Phoenix, Memphis, and San Diego have seen an increased migration of people and businesses from other U.S. regions in recent years, thus increasing office space demands. Meanwhile, specific sectors such as healthcare and life sciences require specialty workplaces with proximity to patients and equipment not conducive to remote working. Beyond such exceptions to the rule, however, the U.S. workplace will be forced to adapt to new trends and demands from the U.S. worker.

For architects, this adaption brings challenges and opportunities. The most clear challenge, as expressed by our survey results, is the decrease in demand for office square footage filtering through to a decrease in demand for architects to design such space. Such pressures continue to be seen in the AIA’s Architecture Billings Index, where billings from commercial sector projects have declined month on month for the past year. This is not an office-specific issue, however; the AIA’s index merges offices together will all other commercial and industrial typologies, while the index’s other two categories, institutional and residential, have shown similar declines in the past year.

The future isn’t entirely bleak for the office. While vacancy rates for office space are up, the level of construction spending on offices has been steadily, though marginally, rising since 2021, according to data from the Associated Builders and Contractors. Meanwhile, The Wall Street Journal reported in 2023 that the number of leases signed for office space had begun to increase, though the average new lease was for considerably smaller space than before the pandemic.

Office conversions are not without challenges, from zoning to building codes to mechanical systems, though such challenges could also be viewed as design problems architects can position themselves as experts to overcome.

Such signs suggest that opportunities for architects in office space design may lie beyond the delivery of new office buildings but in the redesign of existing stock. In particular, the need for building owners to entice tenants back into the workplace may also lead to opportunities for architects specializing in retrofits and remodeling.

“Firms committed to in-office work understand that they need to offer employees a compelling reason to make the commute,” CBRE notes in their analysis. “Modern, responsive office designs encourage collaboration, health, and wellness by creating spaces and environments filled with natural light and featuring comfortable meeting areas and abundant amenities — both on-site and in the neighborhood.”

Elsewhere, firms specializing in adaptive reuse may find new opportunities in repurposing office buildings for other, more commercially viable uses such as residential and hospitality. Office conversions are not without challenges, from zoning to building codes to mechanical systems, though such challenges could also be viewed as design problems architects can position themselves as experts to overcome.

“There’s currently a lot of talk about converting office buildings to residential as a solution to our housing crisis,” said Cornell Professor Suzanne Lanyi Charles in a 2023 thought piece. “In a nutshell, some office buildings are great for that. And some are not.”

You can learn more about the recent Archinect Business Survey by reading Part 1 and Part 2 of our analysis.