Rethinking Office Space
Cresa recently published a collaborative white paper authored by Christie Minch, Managing Principal, Cresa Project Management and Ashkahn Pajoohi, Professor at the NYU Schack institute of Real Estate. This white paper goes into some detail on how the workforce has changed dramatically and explores how businesses need to “Rethink” their business environment. If you would like to discuss how we can help you rethink your businesses commercial office space, please contact me at 301-841-6542 or visit www.tenant-broker.com
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Rethinking Commercial Office Space
In March 2020, companies around the United States sent the
majority of their employees home to work in what was to become the largest
remote work experiment ever. Overnight, bustling offices emptied out and
business districts became ghost towns. Fast-forward to December 2020, and we
find that most employees are still working from home with tentative return to
office dates. But, forward thinking companies are not sitting idle and waiting
for brighter days. These companies are hard at work, critically examining how
to re-think their real estate requirements based on a new set of parameters
focused around their employees.
It is clear that future business success will be determined
by building a tech-enabled agile environment that fully supports how employees
work, what activities they perform, what tools and resources they need, and how
they interact, collaborate, and innovate to maximize productivity. This forced
remote working experiment has shown companies and employees that remote work is
entirely feasible within the right framework and is here to stay. That said, as
virtual meeting fatigue and lack of human connection with colleagues continues
on, this extended time away from the office has shown that physical offices
remain critical to a company’s operations. There is not a one-size-fits-all
approach to how companies will address their future workplace needs as each
company, employee, and office culture are different, but commercial office
space should continue to sit at the core of future business strategies.
Case for
remote work
In 2019, approximately 3.6% of U.S. based employees worked
from home (at least halftime). Fueled by a traditional office-centric mindset,
technology restrictions, business function, and in some cases a lack of
perceived trust by managers when employees were absent from view, remote
working remained a sliver of the total work force until COVID-19 turned the
world upside down.
Today, the argument for remote work is even stronger than
pre-COVID. Putting COVID and health risks aside, flexibility is arguably the
most important and significant benefit of remote working. Studies show that
employee flexibility yields greater productivity, employee happiness, mental
well-being, loyalty, and job satisfaction. Employees tend to work more hours
over the course of the day based on their work requirements and when they are
most efficient (morning people vs. night owls). A growing number of employees
actively seek out jobs with some flexibility and are willing to trade salary
for flexibility. According to a recent Forbes article, 54% of survey
respondents stated that they would change jobs for one that offered more
flexibility.
Greater work flexibility enables employers to pull from a larger and more diverse talent pool and has proven to be an incentive to support talent attraction and retention numbers. Remote work removes (or reduces) geographic and economic restrictions of a physical location. Moreover, remote work saves on commuting time. The average New Yorker spends approximately 82 minutes per day traveling to and from work. Some Californians’ average commute times are even longer according to the U.S. Department of Labor. Factor in commute times to work being conducted across multiple time zones (for many employees), and it’s easy to see that employees can quickly burn out and lose productivity over a long day.
Limitations
of remote work
There are clear benefits to remote work, but the limitations
are also very real and should not be overlooked. Data collected during COVID
has brought to light some of these limitations and has offered insight into
specific activities that are better suited to an office environment. Activities
that require higher levels of human and physical interaction (e.g.,
collaborative innovation, hands-on coaching and learning, and mentoring)
benefit from an in-person and onsite approach. Physical presence creates a
different kind of bond and trust between people that a virtual world cannot
easily replicate.
Since March of 2020, video-based communication platforms like Zoom have seen a surge in use as the go-to means for connecting with others. Although web-based communication has solved the short-term need for virtual face-to-face interaction, these communication platforms have their drawbacks. Most platforms offer linear models that best support one speaker at a time, which proves difficult when group collaboration is required. Highly collaborative teams that develop new products/services need a forum that enables spontaneity to share ideas and whiteboard, bounce ideas off one another, build upon existing ideas, and challenge the status quo.
Users also have found that video quality is often mediocre
with digital delays, freezing, and lag time now a workday reality. Although
traditional in-person meetings allow for speakers to connect via eye contact,
video-based communication platforms have highlighted how difficult this is to
achieve when most users stare down at screens and into cameras. Zoom fatigue
(now a well-documented phenomenon showing that continued use of Zoom, Teams,
Skype, etc. can all be taxing on the brain) along with cyber security issues show
that working remotely 100% of the time has its limitations.
Aside from technological difficulties, the challenges of learning from others, shadowing senior staff, mentoring, and employee development, especially for younger employees, have also become more apparent in a virtual world. Observational learning has long been an important component of absorbing, processing, and adapting to new information. Arguably, one of the most important observational learning experiences is found in a setting like a person-filled conference room. Effective leaders are adept at reading the audience, interpreting body language, and making quick adjustments to maintain audience engagement.
Workplace
of the future
Traditionally, companies solved their real estate needs by determining the number of seats required to house their employees. Despite technological improvements and the use of different metrics to determine real estate requirements, little changed until COVID forced companies to send their employees home and adapt to a 100% remote workforce.
Although the workplace will evolve and become more purpose driven,
a critical common element of the future workplace is technology, which enables
not only mobility and agility but also productivity. Technology should not
define the workplace of tomorrow, but rather, become part of an employee’s
toolkit to elevate their work and decision making, increase efficiency, and
ultimately, become more productive. Technology, and the benefits of attaining
full agility, will also enable employees to choose where to work based on
activity resulting in greater productivity.
Workplace strategies continue to evolve as we learn more and
continue to gather data in this predominantly remote working environment. COVID
reminded companies that the world is an uncertain place and risk assessment
warranted closer exanimation. Formerly a nice-to-have, greater flexibility has
quickly become an expectation as companies seek to mitigate risk and exposure
from economic and environmental uncertainties. In the changed marketplace,
landlords are more likely to provide greater lease flexibility to prospective
tenants as market demand continues to grow.
No workplace conversation is complete without discussing the
importance of employee attraction and retention. Compensation and standard
benefits aside, the built work environment, its perks, and culture are critical
components in decision making for current and prospective employees.
Conclusion
It’s a changed world we live in, and the workplace has not
been impervious to these changes. In the near future, when employees return to
offices, the workplace will become a real destination designed for meaningful
physical, digital, and social interaction. Mitigating business risks, reducing
costs, and designing a human-centric workplace around specific workforce needs
will become a competitive advantage for recruitment and retention.
For employees, the freedom to choose where to work based on
what the day holds – remote for heads-down work and the office for resources,
collaboration, team building, culture, socialization, or simply just a change
of scenery – will yield greater satisfaction, engagement, and productivity. The
future model for each company will look very different, but one commonality
will remain: an integrated ecosystem linked by technology where employees can
move freely between home, shared spaces, and offices to perform their work in
the environment best suited for them.
About the Authors
Christie Minch Managing Principal, Project Management
Ashkahn Pajoohi Professor, NYU Schack Institute of Real
Estate
I specialize in providing comprehensive real estate services, exclusively representing corporate tenants on all commercial real estate needs.
Commercial Tenant Broker
2 Bethesda Metro Center, Suite 900
Bethesda, MD 20814
301-842-6542
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