Post COVID-19: Office Design and Market

by | 09 April 2020

An increasingly large number of people are concerned about what the office market and office design will look like post COVID-19. Only being a few weeks into the North American shutdown, we are observing several trends. As things change daily, the items below might also change as we come out the other side. Below are a few of our initial thoughts and observations:

  • An Opportunity to Reevaluate Everything: The way we work and live has been flipped on its head. This will be an opportunity to reevaluate everything.
  • Scarcity of Capital: Companies and individuals are conserving cash and there will be a scarcity of capital and/or unwillingness by companies to invest capital into physical space. I believe flexible workspace operators, like IWG for instance, have an opportunity to win with flexible lease terms and no capital outlay for those who occupy their locations.
  • Flexible Lease Terms: COVID-19 has made people uneasy about signing long term leases (10+ years). As above, I see flexible workspace operators as the winners given, they can offer terms as short as month-to-month. I can see occupiers sign three leases in the same building. One lease will be 10 years, one will be five years and one will be for a rolling year-by-year term to allow occupiers to give space back in times of uncertainty. Rights to terminate will become a more popular ask.
  • Work from Home: This is an obvious one given we’re in the midst of the largest work from home experiment in human history. Those who said they could never work from home are doing it – the habit is forming. The first few days, people enjoyed it, but there are many who can’t wait to go back to the office. I think we’ll see a shift in people who want the choice to be able to do both. More and more companies will consider reducing the size of their office footprint and will encourage more to work from home and hoteling. It also raises the question as to who an employer will allow to work from home. Can everyone do it or just a select group?
  • Productivity: There will be a big focus on figuring out how to make people more productive at home. Working at your kitchen table with a substandard chair on a small Microsoft Surface tablet doesn’t help create a productive environment. I look forward to seeing furniture companies come up with new products, such as a sit-and-stand kitchen table with chairs that are multipurpose.
  • Technology (Hardware and Software): Companies and individuals will spend money on finding hardware, such as better laptops and large monitors as well as software solutions with more robust VPN’s to access company files. There will also be a rise in collaboration tools like Slack & Microsoft Teams along with more robust and secure video conference technology to allow people to work from home more efficiently.
  • Business Continuity: Many were not prepared for this. For instance, I had a client who never stress-tested their systems and employees had no access to their programs while working from home for more than two weeks. I see this as an opportunity to learn and enhance our emergency preparedness for earthquakes, floods, tornadoes and future pandemics.
  • Market Generally: Many businesses will have structurally changed, so expect to see a disconnect between markets with low vacancy rates and an occupier’s willingness and ability to pay market high rents when they are financially struggling to come out of this.
  • Legal/Insurance: Lawyers and insurers will play a bigger role in negotiating the lease to focus on new terms many have heard for the first time (e.g. force majeure, business interruption insurance and contract frustration).
  • Paperless Office: Lawyers have had to significantly retool the way they work. The opportunity to finally create less paper is upon us. For instance, I had a  landlord – who typically requires four original copies of the lease – just say a DocuSign would be sufficient.
  • Office Layout/Design: Density of offices will look differently. Expect companies to give employees more room, such as larger workstations with higher partitions. We’ll also see a trend to more private offices (albeit smaller) and the ability to create space between people.
  • Social Policies: There will be societal change around being sick at the office and company’s sick day policies will change. If you’re sick and come to work, your fellow employees will likely pressure you to go home.  In an extreme case, I had one client tell me she will never shake someone’s hand ever again.
  • Cleaning: There may be a new cleaning certification that landlords will need to adhere to or could offer as a competitive advantage to secure new occupiers. If we do see an increase in hoteling, what will the cleaning regime be for a desk that is occupied by one person in the morning and another in the afternoon?
  • Building Security: Landlords may install infrared scanners to measure people’s temperatures in buildings.
  • New Materials: Expect to see new materials in the build out and construction materials of furniture to be antimicrobial. What can we learn from the health care industry?
  • Remote Offices: In the long-term, we may see employers set up offices in secondary or tertiary markets, which will aid in business continuity and service a growing number of younger people who want to own a house. We’ve learned that urban density helps spread disease and being cooped up in a small apartment with kids doesn’t help productivity or good relationships.
  • Creative Work from Home Options: One London law firm created a “shed” — a 12×12 structure complete with four walls, a roof, desk and is Wi-Fi enabled. Drop it into your backyard (if you have one), plug it into a power source and you’ve got a private space away from the house to work.
  • Work Attire: Working from home and video conferences have changed the narrative around business attire. Everyone is dressing more casually (e.g. workout clothes, lounge wear, sweats, etc.); so will everyone dress more casually when we return to work or will we want to dress up?
  • Clean Air: Most buildings have a tremendous amount of recirculated air. Expect to see more attention placed on understanding the air handling system of buildings and increased investment by owners in this infrastructure.

About the Author:

Colin Scarlett is an executive vice president of Colliers International in Vancouver, working exclusively with businesses to find real estate solutions for their business challenges. He speaks regularly about the future of the business of law and workplace strategy.