"Hybrid work has emerged as the preferred mode of work among the majority of Americans. That trend has sent a ripple effect across the commercial real estate industry. With 52% of U.S. workers now saying they are hybrid workers, according to a recent Gallup poll and real-estate dealmaking having slowed, experts say that the industry is facing a demand shift that landlords can't afford to ignore."
"The 10-year lease provides guaranteed long-term financial stability for landlords, handing them a predictable cash flow and minimized turnover costs. Yet that model, Garbarino says, has been upended by the rise of hybrid work because employers aren't committing to 10-year leases as much as they used to. He says landlords must win tenants back, guaranteeing luxuries and services that can keep them long-term."
"A K-Shaped Office Economy A 2025 analysis by brokerage JLL and Commercial Observer found that lease length has diverged among sectors. The average lease term among financial services companies was 7.6 years, shrinking to 5.3 years for tech firms, and to just 3.5 years for AI startups. Even for Class A space, or the most prestigious real estate, leases were growing shorter."
Hybrid work now constitutes the preferred mode for a majority of U.S. workers, with 52% identifying as hybrid according to Gallup. Commercial real estate dealmaking has slowed, creating a structural demand shift that challenges traditional landlord models. The longstanding 10-year lease provided predictable cash flow and low turnover costs, but employers are committing to shorter terms. Landlords face pressure to offer amenities, services, and flexible products resembling hotel operations to win and keep tenants. Lease lengths vary widely by sector—financial services average 7.6 years, tech 5.3 years, and AI startups 3.5 years—while Class A space leases are also shortening.
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