POST COVID ERA: The Future of Office Space vs. Working Remote
Before COVID-19 was a household name and quarantining were a thing, many office-laboring Americans (I am including myself here) were accustomed to working remote from home now and again. Maybe on a given Friday, we wanted to work a half-day without having to challenge the traffic commute to and from the office. There are others that made it a common practice to work from their home offices and dining room tables simply because their employers allowed it or even encouraged it. Only now during the COVID-19 era have an unprecedented number of employees, including those from both the public and private sectors, gotten to experience what it is like to practice the self-discipline art of commuting from the bedroom to the kitchen and finally to a designated work area at home while minimizing distractions.
There is no doubt that advancements in online communication tools have made it much more feasible to relocate office staff and teams on a moment’s notice and allow them to be up and running with minimal interruption. Therefore, now that almost the entire world is participating in the greatest “Work from Home Online” experiment ever, where does that leave the office space market? Besides being a commercial broker, I have a dual degree in business and decision sciences, which means I am a data geek. I have always enjoyed digging into the analytics of everything, finding trends and sometimes if I’m am fortunate, finding overlooked opportunities. Anyhow, this reminded me of an informal study I did years ago (for fun) where I examined the evolution of online collaboration tools and measured it against the demand and vacancy rates of office properties in a handful of major markets in the United States. What I found was fascinating but not surprising.
In order to have an appreciation for what my study found; I must briefly take you back in time. Despite having started my real estate career in 1993, I spent a few years dabbling in the information technology sector after college from 1999 to about 2003. I remember back then, the topic of conversation was how all of the new technology that we were working with at the time (i.e. networking PC’s, email, and at some point in the near future reliable video conferencing) would render useless the need for office space and instead allow us to work from home. At the time, it seemed like there was some substance to that belief, seeing how many of us were indeed working remote, however, it wasn’t from home.
During the mid to late 1990’s a phenomenon happened, not only were we able to “Cut the Cord” as was the common phrase, and work remote as a result of laptops and the technology that came with them, the era also launched the greatest social experiment of all time. In 1999 we could easily work outside of the office from our laptops in the comfort of our own homes, yet few ever did. Instead, almost everyone I can think of rushed every morning to their favorite Starbucks and connect online from there. Groups of peers that would otherwise work from the office, met to share ideas over caramel macchiatos. You see, no matter how much technology allows us to be comfortably apart, by human nature we will always exceed in productivity through physical social interaction. The office space, no matter how large or small, allows creative minds to come together, collaborate and solve problems as one.
Despite the evolution of collaboration technology in both their capabilities and cost-effectiveness to work remotely, the overall demand for office space has not wavered much as a direct result. In fact, what I have experienced over time from directly representing office lease transactions, is that my tenant clients have not reduced their need for office space, but rather have reconfigured their layout requirements. While some of my clients maintain a traditional “Private Office” design, the general trend for many others have been to move towards both a hybrid private / bullpen layout, or completely open work area model.
It is both my personal and professional opinion as an office space user and commercial real estate broker that the post-COVID-19 era of working remotely online will not hinder the demand for office space. In fact, I am a strong believer that the office space itself is a necessary collaboration tool that will continue evolving over time. The key take-away for any organization, whether private or public, is to know how to maximize the productivity value of its office spaces for the benefit of its greatest assets, its people.
Irving J. Diaz CCIM is the founder and managing principal of Zureq Realty Advisors. He is a seasoned commercial real estate advisor and broker with over twenty-five (25) years of experience. He is a subject-matter expert involving a variety of commercial and industrial property asset classes and has represented a wide range of clients, including private investors, family trusts, owner-occupiers, and corporate tenants.