Tue, May 12, 2020

A post-COVID world?

What next for the office in a post-COVID world?

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It is very possible we are experiencing a seismic shift when it comes to where we work. Maybe we’ve had it wrong all along. Perhaps even in the long term, the need to justify ‘work from home’ will be replaced with ‘work from office’ as the rarer occasion?

One thing’s for sure: for the foreseeable future, the office life we’re all familiar with is gone. And with companies like Twitter saying employees have the option to work at home forever, and even traditional insurance companies like Nationwide closing offices and embracing work from home more permanently, it’s a safe bet that conversations about workspaces of the future are happening in businesses all over the world.

History tells us that we are adaptable and resilient, but also forgetful. The biggest unknown right now is the long-term reaction to the crisis created by the pandemic. Innovation may be driven by turbulent times, but it must also be more than simply a reaction to a moment in time.

Having spent the last week speaking with landlords, tenants and brokers I’ve created a matrix to start mapping the different solutions required to build out the new healthy and safe office. My goal is to prompt some questions about how these might evolve over time.

As you move across the matrix, costs go up and so does uncertainty around time to implement. I predict that the office in the short term will be different, but ultimately dollars will drive bigger decisions. The key question will be, will we all go back to office life as usual before the long-term technology-driven opportunities have the chance to become embedded?

Solutions will be very manual and procedural at first, but over time, technology will play a critical role. The big assumption I’m making is that offices will never revert back to how they operated before: highly social, minimal square foot per person, amenity rich with a focus on collaboration in person. Initially, companies making a bold investment will build employee trust and help reduce fear, but how long will that last? In this economic environment, where companies are even more cost conscious, any new technologies will really need to prove their return on investment to get traction.

We sent out an informal survey to venture backed technology companies to get their views on the topic. When asked ‘if coronavirus was no longer a threat, would your company return to the same office environment as you previously had?’, over 50% said yes. So making the assumption that businesses will never truly return to normal, might end up being a fairly big leap. Responses to the survey are shared throughout.

Why open the office at all?
It’s a natural question. With the forced move to remote working, virtually overnight, the received wisdom that the office plays a pivotal role in successful business life has been challenged. A lot of businesses seem to be making it work, so why go back at all? Based on companies surveyed, the most common primary reason to re-open the office is for collaboration.

Big tech has been public about its plans around office re-opening and work from home policies. Google has extended its remote work policies for the remainder of the year. Amazon has stated it will allow corporate employees to work remotely until January. As I mentioned above, Twitter went several steps further and announced that its employees can continue to work from home permanently. Apple on the other hand is planning to bring employees back to the office. Which way will the market overall trend? The answer to that question will have a profound impact on how the office infrastructure market reacts, and where the greatest opportunity for innovation lies.

Office barriers
There are many challenges that must be overcome to open offices, some of which are out of companies and landlords’ control. These include:

  • Public transit — for employees who have to take the train, bus or subway to work, the commute is more of a risk than the office environment;
  • Common spaces — landlords must manage common spaces in buildings including lobbies elevators and washrooms;
  • Inability to socially distance within the office — many offices are set up in a way where the spacing between work stations and common areas do not meet social distancing guidelines; and
  • Childcare — as schools are closed right now, parents must manage childcare at home which, depending on their situation could prevent them from being out of the house.

36% of companies we spoke to found that the inability to socially distance within the office was the biggest barrier to re-opening, although 53% do not expect their square footage to change in the next 12 months.

So now what?
There are two critical stages for both tenants and landlords. The short-term focus is (literally) about survival, which means meeting critical health standards. Getting this wrong would have consequences far worse than not opening.

Urgent and important (the left hand side of our matrix)
In the short-term, companies and landlords are hyper focused on making an office re-opening possible but the timeframe continues to get pushed out. According to Steffen Kammerer, Managing Director of commercial real estate broker JLL, “as companies start the process of preparing to re-open, there are so many more layers to investigate and many are hesitant to be the front-runner for reentry.”

For companies, the priority is their employees. Based on discussions I’ve had, most companies are surveying their employee base to understand sentiment around returning to the office, which will then guide the company’s approach. Our survey indicated that the majority of companies will be reorganizing workspaces to enable social distancing, staggering days people are in the office and increasing the cadence of office cleaning.

When asked how prepared your company is to re-open the office, 71% rated themselves 3/5 on preparedness. More than half anticipate opening the office in summer 2020.

The responsibilities between the landlord and tenant can get blurred, but it’s safe to say that for building owners, the lobby, elevators, restrooms and cleaning are top of mind. Whether it is a person in the lobby pushing buttons for tenants or providing PPE to people entering the building, landlords are r