Hybrid work has become the dominant work arrangement for most Americans, creating a ripple effect throughout the commercial real estate sector.
As 52% of U.S. workers now identify as hybrid, experts indicate the industry is confronting a significant shift in demand that property owners cannot overlook. Chase Garbarino, CEO of the global software firm HqO, which operates across over one billion square feet of office space and monitors amenity usage, stated that while the top rule of real estate is still location, new dynamics are now governing offices.
“The reality that hybrid work is here to stay means landlords will need to make substantial structural changes to their business models,” Garbarino told . “The entire industry has been largely built around the 10-year-plus lease as its primary product. They are going to have to start thinking and operating much more like hotels.”
The traditional decade-long lease offers landlords assured long-term stability, providing predictable revenue and reduced costs from tenant turnover. However, Garbarino explains that this model has been disrupted by the growth of hybrid work, as companies are less inclined to commit to such lengthy terms. He asserts that landlords now need to actively attract and retain tenants by ensuring high-end services and luxuries.
A K-Shaped Office Economy
A study by brokerage JLL and Commercial Observer revealed a divergence in lease lengths across different industries. While financial services firms averaged lease terms of 7.6 years, this figure dropped to 5.3 years for technology companies and just 3.5 years for AI startups. Even for top-tier Class A properties, lease agreements are becoming shorter.
“They have to repeatedly earn people’s presence,” Garbarino said.
Despite return-to-office mandates, Manhattan’s luxury office market is experiencing growth, particularly among financial, legal, and tech firms. The volume of leases signed for Manhattan office space priced at $100 per square foot hit a record high in 2025. Data from brokerages JLL and CBRE shows 313 leases were signed at that price point last year, a jump from 212 in 2024, representing a nearly 50% year-over-year increase.
Major corporations are capitalizing on this trend toward luxury. For instance, JPMorgan moved its headquarters to a $3 billion, 60-story tower at 270 Park Ave. in October—a building it owns—which is outfitted with resort-style amenities like hot and cold plunge pools, meditation rooms, 19 restaurants, and multiple coffee shops.
This shift is not confined to New York. Companies nationwide are investing heavily in high-end amenities for their staff. Larry Ellison’s Oracle, which is acquiring TikTok’s U.S. operations, is building a 70-acre tech campus in Nashville designed to operate as a self-contained town, complete with a high-end Nobu restaurant and a hotel.
Although Garbarino observes that nap pods are the most frequently reserved amenity in a building near JPMorgan’s headquarters, he contends that amenities by themselves are insufficient to lure employees back. “What we are observing in commercial real estate is that, frankly, space has become a commodity,” he said. “Location remains crucial, but it is no longer a strong enough differentiator on its own.”
He suggests that the value of amenities is often tied to company office policies, serving to foster a healthy environment for employees who are mandated to be onsite full-time, rather than being the main attraction. “These features will serve as a balancing factor,” Garbarino said. “If you are expected to work long hours and be here constantly, we aim to counterbalance that with a healthy work setting.”