How will COVID-19 change the way that we use office space?

When we are past the current moments of uncertainty and risk from COVID-19, what will we identify as the lasting impacts to the commercial real estate industry? It strikes me that how we work and where we choose to work will be impacted by the virus and we will see that play out in office buildings.

Think about the cities and countries across the world that are under quarantine, where schools are closed, businesses are closed, with office workers telecommuting from home. Now consider Seattle, where the most deaths related to COVID-19 have occurred in the US. Last week, Washington State and local officials issued recommendations that, "Workplaces should enact measures that allow people who can work from home to do so." Employers, including the large tech employers such as Amazon, Microsoft, and Facebook complied and encouraged their employees to work remotely through the end of March.

Prudent businesses in today's global, technology-enabled environment have robust business continuity plans that allow their core businesses to operate during a disruption. In addition, employers are focused on retaining, recruiting, and growing talent in their workforce in order to execute their business strategies, so many firms already have remote teams working across the globe. For employees whose role is conducive to remote work (think office worker compared to bus driver), that means that they already have the technology set-up to work remotely.

Today with COVID-19, when employees are working remotely that means that they are working from home. So, what does working from home look like for many employees? We can start with where many people live today. Many Americans are living in apartments today and those apartments are getting smaller each year. In the decade ending 2019, the US saw 2.34 million new apartment units delivered. For Seattle, in the year 2019, the metro area delivered 13,682 new units, half of which (6,854) are located in Seattle proper. Seattle also boasts the smallest average apartment size in the US at 711 square foot, as of 2018. Today's new apartments have smaller living spaces, smaller kitchens, and smaller bedrooms. And due to the continued annual rent increases ranging from 2.7% to 5.1% since 2011, many apartment dwellers are cohabitating as roommates or couples.

Teleworking is not a new concept and many employees have had the choice of going into an office or working remotely. Many of those employees have chosen to go to the office because that is where they eat, work-out, shop, socialize, and complete their work. They have a routine that they follow. Now that routine will need to change as they find ways to complete their work remotely and obtain their food, coffee, entertainment, and socialization all from the comfort of their small, expensive, shared apartments.

Once employees have established their new routines of working from home and employers see that business does not suffer due to remote workforces during the disruption, companies and their employees will engage differently with office space. Employees who have the choice and prefer the remote work will opt to continue to work remotely rather than go into the office. If that is not an option at their current employer, they will find a new one. Employers will look at their inventory of office space and evaluate whether it meets their post-COVID-19 needs. Do they have enough of the space that is most valued by their talent? Do they need less desk space in exchange for more agile space? Space that can be used for different functions - large meetings, project-based team work, training, socialization? Does the building offer the amenities demanded by their talent that will lure them into the office?

As employees and employers impact the demand for office space with the new way of working post-COVID-19, what can smart owners do to put their properties in the path of this change so that they can differentiate and win? Over the last decade, smart office building owners have adjusted and met the demands of the evolving workplace, which includes densification, amenitization, agile spaces, engaging public spaces, and community building, so they can do it again. 

To keep ahead of the pack on this change in demand, smart owners will gather information on multiple fronts: engage directly with tenants’ HR and IT departments to identity the shift at the employer level; use tenant engagement platforms to learn directly from employees, including questions about what they value at the building where they office; and continue to provide space that meets the needs of today’s workforce in today’s workplace. 

Please send me your thoughts on the change in demand and your ideas on how to stay ahead of the pack.