By Deborah Smith
August 5, 2020
A New Office Framework? Another Example of a New Way of Doing Old Things?
So, you think shared workspaces are dead? Not so fast. Shared workspaces (aka coworking firms) are likely to be beneficiaries of a COVID-19 infected world.
Here’s why…
Industry norm over decades past dictated having a large enough office space to accommodate some conference rooms, a kitchenette, a reception area for guests and a desk for every employee. Maybe some interior bathrooms too. Maybe it was open floor plan; maybe it wasn’t. Trends on what works best have bounced around for years.
But here we are. COVID-19 has forced remote work to be the new normal and making the previously thought impossible or improbable to be both possible and probable realities. At the crux – employees really can work productively from home – on a full-time basis. No need to spend hundreds of hours in a car or on a train each year to prove it either. The last few months alone have provided all the supporting evidence we need. It also turns out that technology can create substitutes for in-person meetings. It may not be perfect, but it sure makes a better substitute than thought possible. Imperfections and all.
We shouldn’t be surprised. For starters, the U.S. Census Bureau estimates the average employee spends about nine days a year commuting to and from work. But for about 10% of the workforce, the commute is 90 minutes or more each day. Commute times have been rising for years and is increasing reflective of a growing trend of declining urban living affordability which has forced many employees out to suburbia and fringe areas in search of affordable homes / lifestyle.
But here’s something else (to which I can relate) about remote working - employees have no one sitting next to them to chat away between deliverables. No water cooler talk. No passing each other in the hallway talk, and no going to get lunch break talk. I personally have found that my own workdays are longer, quieter and a whole lot more productive. But here’s the “but”, and it’s a big “but”: productivity is not a substitute for firm resiliency and is not the sole factor driving firm growth. Achieving these objectives requires cultural, moral, collaborative and social interaction. It is these things that are equally necessary to successfully propel any company into the future. It also makes employees happier and more content with going to work each day.
So where does this leave us? We believe the new normal will probably be a hybrid model of core office, satellite and home-based work. We doubt it will go back to how it used to be. Now that COVID-19 has caused this initial pivot, the broader macro trends which have reshaped other property sectors (e.g., retail and apartment) are now etched into the office sector and, we believe, are here to stay. A new way of doing old things. Generational and philosophical shifts meet necessity. That’s the essence of the workspace pivot. Turns out, millennials aren’t the only ones who like to eat and live near where they work. Lots of people do! Employees were already demanding an increased focus on life before Covid-19. Remote working has cemented their views of the workplace: the role of work in their lives, well-being and the importance of flexibility and social interaction in everyday life. Employers have been forced to adopt to this mindset over past months. But in so doing, many employers realize that, perhaps, it may not be such a bad thing. Balanced, happy and productive employees – really, not such a bad thing.
A Gallup poll from May reported that during the polled period, 48% of employed Americans always worked from home and that another 20% reported sometimes worked from home, for a total of 68%. That represents a whopping 100 million Americans. Compare those numbers to 43% back in 2016 when Gallup last asked Americans about their remote working habits. Good luck getting back to those 2016 statistics anytime soon. Remote working has been on the rise for years. But importantly, do we need to, or do we even want to?
In early June, Gartner, Inc. conducted a survey of corporate leaders and found that in the future, 82% plan to allow remote working at least some of the time; 47% said they intend to allow full-time remote work going forward. COVID-19 has been a catalyst for employers to re-evaluate work practices and reexamine the function, purpose and necessity of traditional workspaces. This may lead to the return of suburban office space and office parks conveniently located around where people live, but that’s a topic for another day. What seems more likely is a potential shift to remote work and/or regional office locations rather than a flagship corporate office where all employees must go each day. With mindset shifts, the options are remarkedly broad – including smaller scale centralized office and regional hubs, flex or coworking space located closer to where people live. All smaller footprints. All catering to collaboration but with no expectation that all employees will be in the office working every day. Flexible, simple solutions are needed. It also happens that many firms have become more cautious with spending dollars and unwilling to commit to office space for long term leases in an uncertain world – flexibility is key going forward.
Flexible, adaptable office space is uniquely suited to a hub-and-spoke trend to respond to companies based in big cities as they seek to downsize city headquarters and open smaller satellite offices with safer and less dense environments. We aren’t suggesting the corporate office is going away or that it won’t be important. Home bases are as important to companies as they are to baseball. However, we should anticipate it being smaller going forward. It will also need to be flexible. If commuting is an issue, reduce the commute. Locate office space closer to where people live. Isn’t the working from a home away from home concept seem like a logical progression to where we are today?.
So, again, who benefits? Probably the coworking operators. They are adaptable, flexible and agile enough to spontaneously respond in the proverbial New York minute to changing consumer demands, while the traditional office players are still thinking about occupancy in terms of slabs of office space on long term leases. Coworking operators can shift business models from desk-sharing to private spaces, private group spaces, or shared private group spaces. The model is defined by flexibility, agility and fluidness. For the naysayers who think shared work spaces are incompatible with protecting health and safety because the whole concept of collaborative work space somehow sounds contradictory to social distancing – not so fast. The reality is that some coworking operators are also at the forefront of responding to the COVID-19 pandemic with detection, testing and evaluation programs to keep workers safe. Coworking operators can work with tenants to support social distancing, creating sanitation stations, plexiglass, different kinds of furniture solutions and cleaning and maintenance programs. They have thought through and implemented all the non-touch/minimize touch requirements. They can also create COVID-19 polices and design solutions for smaller tenants. It truly is an economics of scale concept that coworking operators can execute more effectively and efficiently for the benefit of multiple tenants, particularly smaller to mid-sized tenants.
Employees have to work somewhere. Alternative workspaces will be etched into new business models; sustainable alternatives to kitchen tables, bedroom nooks and sunrooms. We aren’t sure how things will shake out. Every employer needs to make alternative workspaces compatible for them. But one thing is for sure – optimal workspace solutions for the new working world are up for grabs, for whichever players can get there first ….