Here's How Offices Of The Future May Compete With Remote Work

Before the coronavirus stormed workplaces worldwide, the office sector had hummed along relatively unchanged for much of the past several decades.

Before the pandemic, about 10% of workers able to work remotely did so full time, and an additional 20% did so some of the time, according to Gartner. Now, chief financial officers the company surveyed indicate 19% of workers will go remote full time and 29% will go remote some of the time.

In part, that change is also a result of workers' preferences for flexible work. Only 15% of workers want to work from the office full time, according to a survey conducted by CommercialCafé.

Now, months into a pandemic, commercial landlords are tasked with trying to lure companies permanently back from what has been, at least for some, a surprisingly successful experiment in remote work. Some may not be able to bring people back to their current properties. Those that do must reorient around helping foster collaboration, building company culture and boosting talent-recruitment for occupants, experts told Bisnow.

But the short-term prospects alone are a challenge for commercial landlords. As local economies reopen and re-entry unfolds, owners and property owners must sufficiently sanitize, allow for social distancing and contend with the elevator-as-a-choke point conundrum.

Longer-term, companies’ leasing decisions are in question in a way they weren’t pre-pandemic, before thousands of companies were thrust out of offices.

“The wrong stock is going to lose tons of value, because who wants it?” CREtech Leadership Board Member Antony Slumbers said.

Many of those that don't want such stock will opt for remote work, like some apparent converts to the arrangement already have. Chief executives for Morgan Stanley and Nationwide Insurance, for instance, have both said their companies will reduce their office footprints in light of remote work’s effectiveness.

The movement has gained steam elsewhere. In a tweet announcing the $80B e-commerce company’s move to permanent remote work, Shopify CEO Tobi Lutke declared “office centricity is over.”

Some companies lacking a choice will still settle for offices set up for types of desk work that companies and managers now realize can be done remotely, according to Slumbers.

But companies in industries fit for remote work now know they have a less costly alternative, which likely necessitates changes for many owners, Gartner Vice President Brian Kropp said.

“If you’re still viewing your corporate real estate as the place where people sit in a cube and work, and that’s what you’re offering, it’s going to be harder to maintain your client base from that perspective,” Kropp said.

Instead, Kropp and Slumbers argue office owners must reorient their properties around organizational goals many agree are less attainable through remote work.

“The number of people who commute into major cities to sit at a desk all day and tap away in front of a screen, doing absolutely zero that they couldn’t do somewhere else, is ludicrous,” Slumbers said.

“The flip side of that is that as the office become less vital to actually conducting business, it’s actually becoming more important because the work we’re starting to do is becoming more and more human work,” he said.

Companies already leaning into the mode, like San Francisco-based cloud software company Okta, are doing away with dedicated desks and adding more meeting areas to enable collaboration less easily done by videoconference.

Colliers International Vice President of Workplace Advisory Michelle Cleverdon said she foresees something like a clubhouse to foster connections and collaboration, whether for brainstorming with co-workers or making a presentation to clients.

“You’re going to need less space for desks,” she said. “The office is where I’d want to go and connect with people."

Kropp said he has spoken with companies wanting to reorient certain office locations as a place to build connections with various types of stakeholders. Some are looking at using their offices as a way to showcase their products or services, like a sales floor as opposed to a workspace, while others are looking at providing space within space for companies in their supply chain.

From a health and wellness perspective, several short-term measures allowing companies back into offices this year will likely stick around for years to come, Powers Brown principal Stefan Dytrt said.

Facilities managers for large corporate users have traditionally checked boxes for amenities like fitness centers, concierges and conference centers when touring a space. Now, touchless technology for entry points and a state-of-the-art mechanical system are likely to become permanent fixtures on their checklists, Dytrt said.

“Tenants are going to become savvier,” he said.

Both Dytrt and Perkins Eastman Managing Principal Barbara Mullenex said more controlled environments will be sought by tenants. Dytrt cited a micro-suite concept Powers Brown has designed in the past as a smaller, more controlled alternative to big conference areas often shared by tenants in a building.

“I think people are going to be really sensitive for a long time about walking into a space that they don’t completely control," Mullenex said.

The potential upheaval coming to the office sector mirrors adjustments seemingly on the way for multifamily properties, as apartment owners pivot to emphasizing a community's safety.

Though the threat to office owners is aggregate demand likely falling, Slumbers said there is also an opportunity to add more value for occupants and see higher rents.

“There are lots of opportunities for actually probably generating more money out of office buildings in the future than we have historically,” he said.

“But it’s only going to be if the way they are operated and run, and their form factors, adjust to providing exactly what it is that people really need an office for, as opposed to just being somewhere where you put people because you don’t know where else to put them.”

-May 27, 2010 Dean Boerner, Bisnow San Francisco Area


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