To state we are in challenging times falls into captain obvious territory. A historic pandemic, mandated closure of businesses, unemployment levels not experienced by most living humans, trillions in government stimulus packages, criminals being released from prison as business owners who open their hair salons take their place, new social distancing standards, incessant hand washing, face masks, etc., we could go on and on with the challenges facing the office sector.
How will commercial real estate adjust to the new normal in a post-coronavirus world?
Rewind 10 years ago:
To fully comprehend the challenge the business community is facing, we need to first remember the past lest we make the same mistakes. How did we get to such high density use office space? Let’s rewind ten years.
In 2010, WeWork opened their first shared office location in SoHo New York. Cofounders Miguel McKelvey and Adam Neuman discovered a new phenomenon which would carry over into the corporate world. Taking advantage of the built-in benefit of short-term flexibility of the shared office industry, WeWork offered trendy collaborative spaces and common areas where employees at startup firms and technology companies could share ideas, react to change and live on the cutting edge. What a WeWork member lost in personal office space, they gained back in grand and modern common spaces such as conference rooms, meeting rooms, and lounges that competed with the local coffee shop. Free beer anyone?
The idea of employees working collectively in tight spaces took off in the corporate world. The Great Recession left many corporations with too much high-priced office space. Several large corporate users began to look to the coworking operators such as WeWork for satellite and hub offices with an emphasis placed on flexibility and cost savings. Commercial real estate lease payments often amount to the second highest fixed expense behind personnel cost. Therefore, the corporations that continued forward with traditional office space, modified their layouts to make spaces more efficient and cost effective (smaller) including less closed offices, more open plans, cubes and eventually benching.
More and more corporate offices resembled WeWork’s modern look of concrete floors, open ceilings, glass walls, and open workstations/benching space where companies could stack as many employees as the local municipal code and building parking allowed.
The trend continued until March 2020, when the coronavirus pandemic and the subsequent Great Lockdown by governing authorities shocked the United States and the business community. In just a few short months, the modern office space will once again need to evolve to keep pace with today’s current trends.
Today’s office challenges
Social distancing used to be a negative term to describe actions by an extreme introvert. Today the phrase social distancing dominates the entire fabric of American life including the political arena, the media, the medical field, the sports and entertainment world, and the business community. Even religious institutions are providing social distancing services.
A more radical chasm could not exist between the office of early-2020 and the office of mid-2020. The popular corporate design of benching, which amounts to a long table with employees seated two to three feet apart next to and in front of each other, leaves one queasy. If one person sneezes, the entire office sneezes! Spending the working hours in close proximity to others, only to have breaks/lunch in similar crowded lounges and meeting rooms, is no longer culturally acceptable and perhaps soon will be regulated by local municipalities and design codes due to COVID-19.
Then there’s the numerous antiquated touch points that dominate the entries and exits of office buildings. When you total the potential germ spreading touch points in an office building experience from parking machines, door handles, elevator buttons, sinks, copy machines, coffee makers, etc., its no wonder corporate occupiers of space are not rushing their employees back to the office.
Re-occupancy plan and strategy
Work from home implementation is being discussed across the entire U.S. corporate world. Many companies such as JP Morgan Chase, Barclays, Morgan Stanley, Square, Nationwide, and others have announced some form of permanence to their work from home strategy. However, many businesses plan on bringing back a significant amount of their employees, if not all of them long term.
What can be done now to get back to work in your own office space in the short run? The following is suggestive and should not replace your local governing COVID-19 guidelines.
Step One – The Office Building
Each office occupier should be in contact with their landlord and/or property management agent to understand the measures the property is taking to ensure the safest work environment possible. The landlord’s involvement in your re-occupancy plan is paramount.
- Is the office building open to tenants, and if not, when?
- Has the property undergone a thorough deep disinfectant cleansing prior to reopening?
- What is the building’s ongoing sanitation plan for touch points such as elevator buttons and doors?
- Will elevator capacity be limited or will the staircases be opened?
- What additional sanitation precautions are in place for tenant spaces?
- Will entry and exit into the building and garage transition to touchless technology?
- Will common area restroom doors continue to be closed or locked?
- Will amenities such as gyms, conference centers and cafeterias be available for employee use?
- Is the current air conditioning system capable of fresh air standards? Have filters been changed or upgraded? UV light?
- Will the property require and/or provide personal protective equipment such as face masks and gloves?
- What is the visitor policy of the property?
- Is the property’s data infrastructure adequate for the new online demands of teleconferencing?
Step Two – The Workforce Strategy
Once a company can feel confident the property has an active plan to provide a safe work environment, the next step is to determine your company’s workforce strategy; namely, how and when to bring employees back to the office.
- What is the corporate policy for work from home versus work at the office? Has it been communicated to the firm?
- How will you phase in the return to the office?
- Which employees are vital at the corporate office and which can continue to effectively work from home?
- Are there employees who express safety concerns in returning to the office? What’s the policy and for how long?
- Will health checks be required of employees such as temperature checks?
- Will personal protection equipment be required of employees in the office?
- What is the policy if an employee test positive for COVID-19?
Step Three – The Physical Office
With an understanding of the property’s re-occupancy plan and your own workforce strategy, let’s fix our attention on the actual office.
- Can the front door(s) of the office be modified for touchless entry?
- Will cubicles and work stations need to be displaced to accommodate for social distancing?
- Consider taping off chairs and workstations to provide extra space.
- For sizeable companies, consider directional arrows and other markings on the floors to direct traffic flow.
- Post signs throughout the office to practice social distancing especially common areas such as kitchens, reception, mailrooms, and conference rooms.
- Will the office still provide coffee/tea/water? Can it be provided safely?
- Can social distancing be accomplished in the kitchen/lounge or will it need to be off limits?
- Will the shared refrigerator be plausible or will you encourage employees to bring their own coolers?
- Will visitors or solicitors be allowed in the office?
- Is your current data plan adequate to accommodate teleconferencing?
Consistently communicate the property’s and your company’s social distancing policies to all staff.
Having a comprehensive plan which encompasses the office building, workforce and your physical space is key to bringing employees back to the office. Taking the above threefold approach will streamline your re-occupancy plan and smooth the transition back to the office.
A word of caution and optimism
The Great Recession of 2008 led the transition to high density use of office space. But the pendulum swung too far to the right as compactness and cost savings ruled the day in an over-reaction to a long and bitter recession that placed a heavy burden on the business community. In spite of how we feel about benching or cramming employees on top of one another, there have been some positive gains from high density and open office space trends. Collaboration and teamwork, the ability to swiftly react to change, communication and integration of the company’s culture all flowed from the open plan and work station design of the office space. An opposite far left pendulum swing to working from silos and bunkers, private offices or most of the workforce at home will undoubtedly disturb the essence of your company’s mission and unique DNA leading to a long term erosion of the company’s culture which will ultimately trickle down to a poor work experience, output and service.
We must react to the new times of social distancing with balance understanding that this virus shall one day pass, soon God willing. As re-occupancy takes place in a post-coronavirus world, let us not zoom past what makes the office great; it’s not the layout of the cubes or the amount of hand sanitizers available, but rather the people who inhabit the office. Practicing social distance while we temporarily maneuver in this pandemic is dramatically different than being socially distant.
We will return to face to face meetings, hand-shakes, corporate travel and entertainment, lunch appointments, coffee breaks, water cooler talks, and working together to contribute our collective talents and skills to the betterment of our families, business and society.
Want a visual aid? We put together a free downloadable PDF checklist. Get it below.
Jorge Morales is President of Blue Box Real Estate, a South Florida commercial real estate firm that specializes in Tenant Advisory Services, Landlord Advisory Services and Investment Sales. Jorge is author of the commercial real estate book entitled Don’t Sign the Lease! and host of the commercial real estate podcast, The Don’t Sign the Lease Podcast.