Hybrid work has reshaped commercial real estate across the U.S. in ways that continue to unfold. What began as a temporary shift during a global health crisis has evolved into a long-term rethinking of how companies use space, how cities function, and what employees expect from their work environments. Office buildings, once central to daily business life, are now being reevaluated, repurposed, or left behind.

For many navigating this shift, whether as business owners, employees, or city planners, the uncertainty can be frustrating. The rules have changed, but the new playbook is still being written.

Office Demand Is No Longer a Given

Before hybrid work became widespread, office demand followed a predictable pattern. Companies leased large spaces, often for years, and filled them with desks, meeting rooms, and break areas. That model is now being questioned. Many firms have adopted flexible schedules, with employees coming in only a few days a week. This has led to a sharp drop in office usage, especially in major cities.

Between 2019 and 2023, office-space demand fell by 41% for companies that required just one in-office day per week. For those with two to three days onsite, the decline was only 9%. Interestingly, companies expecting employees in the office four to five days a week saw a slight increase, about 1%, in demand.

In New York, office property values dropped by nearly $90 billion between December 2019 and December 2023. Researchers project that by 2030, values could remain 47% to 67% below pre-pandemic levels, depending on how hybrid work continues to evolve.

Commercial Leasing Faces New Pressures

Leasing activity has slowed in many urban centers. Long-term commitments are less appealing to companies unsure of their future space needs. Instead, there’s a preference for shorter terms, flexible clauses, and options to scale up or down. This shift has put pressure on landlords, especially those with older buildings that lack modern features.

The total value of annualized revenue for active office leases in the U.S. dropped from $91 billion in 2019 to $77 billion in 2023, a 15% decline. The volume of newly signed leases also fell dramatically, from 414 million square feet per year in late 2019 to just 150 million square feet.

Some property owners are responding by upgrading their spaces. They’re adding better ventilation, touchless entry systems, and wellness-focused amenities. Others are offering incentives, like rent discounts or build-out allowances, to attract tenants. Still, the overall trend points to a more cautious leasing environment.

In suburban areas, the story is slightly different. Some companies are moving operations closer to where employees live, hoping to reduce commute times and improve work-life balance. This has led to modest growth in suburban office demand, though not enough to offset urban declines.

Urban Planning Is Adapting to New Patterns

Hybrid work has also changed how cities function. With fewer people commuting daily, transit systems have seen drops in ridership. Cafes, dry cleaners, and other businesses that relied on office traffic are adjusting their hours or closing altogether. At the same time, some neighborhoods are seeing new life as people spend more time closer to home.

City planners are taking note. There’s growing interest in converting underused office buildings into housing, especially in areas with tight residential supply. These conversions aren’t simple, they require changes to zoning, infrastructure, and building design, but they offer a way to reuse space that might otherwise sit vacant.

Some cities are also rethinking their downtown cores. Instead of focusing solely on business, they’re exploring mixed-use models that combine offices, homes, retail, and public spaces. The goal is to create environments that stay active beyond the traditional workday.

Industrial and Retail Spaces Tell a Different Story

While office buildings face uncertainty, industrial and retail properties are showing more stability. Warehouses and logistics centers remain in demand, driven by online shopping and supply chain needs. Vacancy rates in this sector are low, and investors continue to show interest.

Retail has been more mixed. Malls and big-box stores have struggled, but smaller, neighborhood-focused retail is holding up. Grocery stores, cafes, and service-oriented businesses are still essential, especially in areas where people spend more time at home. Some retail spaces are being reimagined as community hubs or experiential venues, offering services that can’t be replicated online.

Technology Is Changing How Buildings Are Managed

Hybrid work has pushed property managers to think differently about building operations. Technology plays a bigger role now, from smart lighting and climate control to digital booking systems for shared spaces. These tools help reduce costs, improve efficiency, and make buildings more adaptable to changing needs.

Artificial intelligence is also being used to predict maintenance issues, track energy usage, and analyze tenant behavior. This data helps owners make better decisions about upgrades, leasing strategies, and long-term planning.

In some cases, buildings are being designed with hybrid work in mind from the start. They include flexible layouts, strong internet infrastructure, and features that support both individual focus and group collaboration. These spaces are more likely to attract tenants who value adaptability and comfort.

Commercial Real Estate Is Still Finding Its Balance

Hybrid work has reshaped commercial real estate across the U.S., but the full impact is still unfolding. Office demand has shifted, leasing strategies have changed, and cities are adapting to new patterns of movement and use. While some sectors are struggling, others are finding new opportunities.

For those watching these changes, it can feel like the ground is constantly shifting. Long-held assumptions about space, productivity, and location are being tested. But this period of adjustment also offers a chance to rethink how buildings serve people, not just as places to work, but as parts of a larger community.

As hybrid work continues to evolve, commercial real estate will keep adapting. The buildings that succeed won’t just be the ones with the best views or the highest ceilings. They’ll be the ones that understand how people live and work now, and how they want to live and work next.