The Normality Debate
We know with certainty that companies are now assessing commercial property needs. Cushman & Wakefield reports that tour activity — an important indicator of future leasing activity — rose 161% between December 2020 and March 2021.
Looking forward, some organizations want more square footage, some want less, and everyone wants a setting that’s best for employees, customers, and clients. The catch is that what works for one organization may not work for another and there’s considerable debate regarding how best to proceed.
For example, Twitter announced last year that it was going all in with work from home (WFH) job opportunities.
“If our employees are in a role and situation that enables them to work from home, and they want to continue to do so forever, we will make that happen,” said the company.
Microsoft believes there’s a WFH role for employees, but not full-time and not for everyone. The company sees “working from home part of the time (less than 50%) as now standard.”
ViacomCBS, according to Variety, expects the bulk of its 20,000 employees — 70% — to work at home from time to time.
Google is adopting what might be called the 60/20/20 approach. According to Google CEO Sundar Pichai, the company expects “around 60% of Googlers are coming together in the office a few days a week, another 20% are working in new office locations, and 20% are working from home.” In effect, 80% of the Google workforce will be working in a formal office setting at least several days a week.
The Office Traditionalists
However, not everyone is embracing the new WFH patterns. Traditionalists remain.
“This is not ideal for us and it’s not a new normal,” said David Solomon, CEO of the Goldman Sachs Group, according to Bloomberg News. “It’s an aberration that we are going to correct as quickly as possible.”
JP Morgan Chase CEO Jamie Dimon holds a similar view.
“We want people back to work, and my view is that sometime in September, October it will look just like it did before,” said Dimon in May according to CNBC.
Amazon says about 10% of its office staff now work from office locations, but that’s going to change.
“Our plan is to return to an office-centric culture as our baseline,” the company said in March. “We believe it enables us to invent, collaborate, and learn together most effectively.”
For many large office users, the need for commercial space remains. Medical offices, law firms, and government officials all need office space because they interface with the public.
Consider telehealth applications. You can now speak with your doctor, a time-saver when compared with office visits. But will telehealth systems fully replace office visits? Not likely.
How does a doctor take a blood sample or examine a possibly broken bone? And what happens if the patient is calling from a distant location? Will the doctor’s medical license allow him or her to practice across state lines? Which jurisdiction’s rules govern medical malpractice insurance?
The New Questions
While much of the post-pandemic debate concerns traditional business settings versus home offices, in the background the new reality may be more complex.
Assumptions regarding the old normal are in flux, meaning that even if they wanted to, most organizations will not return entirely to pre-pandemic business practices. Instead, every business will have to determine space needs according to how it deals with staff, customers and clients.
The post-pandemic era raises a number of questions.
- With more remote workers how do you assure data, network, and systems security?
- At what point is acceptable office supervision an invasion of privacy when people work from home?
- Can organizations require vaccinations as a condition of employment? No doubt lawyers are working out such policies at this moment.
- Have staffing requirements changed as a result of “robotic process automation” (RPA), increasingly common software that does repetitive office tasks?
- How do we handle “digital exhaustion” when employees increasingly work from home at nights and on weekends?
The New Workforce
Today we see large numbers of unemployed workers while at the same time many businesses face severe labor shortages. Some blame federal programs with additional unemployment benefits and stimulus checks, but the reality is that in early May 2020 there were 23.1 million unemployment claims, a figure that fell to 3.7 million this April.
Simply put, millions of workers have gone back to their jobs and yet for many businesses labor availability is no longer assured. Non-farm labor totals have fallen from 152.5 million in February 2020 to 144.3 million in April according to The Washington Post.
The shortage is at both ends of the labor spectrum. Entry-level workers for fast-food outlets are now hard to find, but skilled workers are also in demand. For instance, the construction industry has good hourly wages and yet the number of open positions in the industry went up from 272,000 in February to 344,000 in March.
Workers are now re-assessing what they want from their jobs. A March study from Microsoft found that 40% of the workers it surveyed had considered leaving their employers this year. As a result, says Microsoft, “a thoughtful approach to hybrid work is critical for leaders looking to attract and retain diverse talent.”
But while the work-at-home movement has plainly gained strength, it’s not for everyone. The Microsoft study found that the need for physical office space remains.
“Over 70 percent of workers want flexible remote work options to continue,” said the study, “while over 65 percent are craving more in-person time with their teams.”
“Most workers welcome the option to work remotely one or more days per week,” says the Becker Friedman Institute at the University of Chicago. It adds that the workers it studied were “willing to accept pay cuts of 8 percent, on average, for the option to work from home two or three days per week after the pandemic.”
Such desires, said the study, were “pervasive across groups defined by age, education, gender, earnings, and family circumstances. The actual incidence of WFH rises steeply with education and earnings.”
Rethinking Remote Work
There’s a growing sense that work-at-home options are advantageous for some employees, but not all. And ditto when it comes to employers.
Research from the Robert Half staffing service shows that those who work from home spend more time on the job. Work/life balance is often an issue. Almost 70 percent of remote employees work on weekends and 45 percent put in more than eight hours a day.
“While remote work affords employees greater flexibility, it also makes disconnecting extremely difficult,” said Paul McDonald, senior executive director of Robert Half. “Many people feel pressure to keep up with rising workloads and are putting in long hours to support the business and customer needs. But everyone needs time to rest and recharge in order to give their best.”
While the pandemic may be more and more under control, it has not gone away. As a result, what we’re really seeing in the commercial office market space is a period of testing, a time to try new ideas, technologies, and systems. Some approaches which sounded ideal upfront are now being rethought while others are gaining acceptance. What’s certain is that a new normal is being created, the broad outlines of which are now beginning to take shape.
To learn more about how commercial properties are preparing for the return to office, click here.