As real estate advisors, we are constantly asked, “What will the workplace look like? How will it feel and function in the coming years?”
In the 24/7 news cycle, we’ve heard hundreds of proclamations from companies– all confident of their workplace model and frequently in contradiction to each other. Major employers, including Amazon, Microsoft and Salesforce, have different strategies. Some expect a return to a primarily traditional workplace, while others have suggested hybrid, hub and spoke, hoteling and even fully remote workplace solutions.
The truth is, we remain in the early stages of the workplace solution and it is difficult for anyone to answer the workplace question with certainty. We feel confident in saying that it will evolve, and the flexibility many employees have enjoyed will remain an essential consideration in the future. We are certain that “one size will not fit all” in our varied work environments, presenting an opportunity if implemented thoughtfully, to assess your needs and “tailor-make” what works best for your business in the post-COVID-19 environment.
As more employees get vaccinated and feel comfortable going back to the office, employers will begin to formulate policies to encourage or mandate returns and get a better feel for their future needs. Leadership must start by engaging key stakeholders in the business today and taking a holistic look at their needs as employees return. The “Reimagined Workplace” will challenge human resources, interior designers and real estate professionals. We will need to work together to determine the right balance for each firm: what kind of work is being done, how employees can be most productive, adequately managed and content, all while remaining competitive in a rapidly changing business world. Critical issues such as collaboration, innovation, culture, mentoring, employee recruitment and retention need to be considered.
In September of 2020, KPMG conducted a survey where 70% of CEOs expected to reduce their office footprint, but this March the same survey only had 17% with that sentiment. How will remote working/work from home (WFH) impact the utilization of office space? Some companies began flex scheduling, and hoteling (where no one has a dedicated desk) in the early 2000s and Starbucks became a major remote work hub this past decade. Still, the COVID-19 induced experiment has changed the way many companies are looking at their space utilization. We quickly adapted to WFH, and the technology advanced 10 years in 12 months. A certain segment of the workforce is well-positioned to make a full or partial transition. Employees whose productivity can be measured, are execution-oriented, can be managed remotely and thrive in a quiet environment fit into potential WFH strategies. Due to long commutes or family dynamics, others may be good candidates depending on job responsibilities. Companies will need to ensure these employees can remain integrated into the business, and beyond being productive, feel connected to the organization.
Surveys have shown that productivity has not diminished, but the concept of collaboration and innovation are driving a renewed interest in repopulating the office. Recently, Amazon’s new CEO Andy Jassy said, “Our plan is to return to an office-centric culture as our baseline. We believe it enables us to invent, collaborate and learn together most effectively.” Large tech firms, such as Google and Microsoft, signed massive office leases in Atlanta during the pandemic. Innovation is not solely the domain of tech firms – all firms need to find creative solutions to the challenges they face. This has proven difficult in Zoom meetings, with no impromptu brainstorming sessions that open breakrooms and collaboration spaces were designed to facilitate. Jassy said, “you just don’t riff the same way, so it’s really changed the way we’ve had to think about how we drive innovation.”
The challenge of creating and maintaining strong company culture is another consideration when evaluating a new workplace. Many executives believe that working in the office is essential to establishing culture, camaraderie and a sense of purpose. Mentoring and establishing senior/junior partnerships has become more difficult in a remote environment. While it may not be critical to have everyone in the office full time, even hybrid models are looking to create a sense of place where employees feel connected. This looms as a significant HR issue as well – 24 months ago, a key driver in site selection and space design was recruitment and retention of employees, and now that is being flipped upside down as we evaluate the very necessity of the office. Will WFH employees be big targets for recruitment? Critically, how can a firm keep its employees and avoid significant turnover if employees do not feel connected, or if they can switch jobs without ever leaving their home office (or kitchen)? What are the costs of high turnover to a business?
Our experience tells us that many employees want to be in the office for social reasons, visibility to management and mentoring. A colleague of ours recently said, “I miss driving to work or a client’s office in the morning with a cup of coffee in my hand, going somewhere to get something done.” Lifelong friendships and business relationships develop in the office, which cannot be replicated remotely. At the same time, the past year has taught us that people do not need to be in the office all the time – it is possible to be productive remotely, and flexibility has been a godsend to many. The challenges are great – some employees will only want to work remotely, and others who want to work three days a week – but not everyone can WFH Mondays and Fridays. This type of hybrid workplace will not be effective nor reduce office space needs. Additionally, new human resource policies need to be created, and technology needs to be upgraded for secure, effective remote work solutions to complement productive office environments.
The workplace is constantly evolving, this time more rapidly than in the past. Can your workforce effectively collaborate remotely to reach the best, most creative business solutions? How can your workplace enable you to grow, hire and compete? These questions need to be answered before decisions on space should be made. However, landlords are in the business of keeping good tenants, so having early transparent conversations about your business goals, potentially restructuring lease terms in trade for redesigning space, may be warranted as you set on a path to your future workplace.
In March of 2020, we enjoyed what we thought would be a short “staycation.” We didn’t miss the commute and enjoyed family time. Over the summer, some thought we’d never need to go back to the office but as business picked up and the workday blurred into home time, we started thinking differently. Now, many people want to be back in the office, collaborating, having business lunches, enjoying happy hour, celebrating business successes – just not necessarily 40 hours a week.