The stable historical relationship between office demand and employment growth has been challenged by hybrid working, with some estimates pointing to a 4% resultant increase in office vacancy rates. But investors attention has now turned to a different relationship. The impact of demographics on U.S. commercial real estate. The numbers are striking.

The cross-generational characteristics of the labour market is changing. Whilst the millennials over filled the work force after the Global Financial Crisis, the baby boomers were also still hard at work. Roll forward to today, we have a situation where baby boomer retirement is not being compensated by enough Generation Z labour market entrants. Added to which is a declining population not being compensated by immigration growth in the U.S., making for even tighter future labour markets.

And as the labour market tightens, employers will have to lean in to the desires of the workers that remain. Both in terms of the city in which they locate their offices, and the attractiveness of the working environment to Generation Z employees.

Identifying opportunities in U.S. Commercial Real Estate in the future, may be less about employment growth, and more about identifying assets that create an attractive working environment for Generation Z employees.