There was a time when some people believed that it was physically impossible to run a mile in less than four minutes. Not just difficult, impossible. After Roger Bannister did it, within a year, three runners broke the four-minute barrier in a single race. Since then, more than a thousand runners have conquered a barrier that had once been considered impossible.
Likewise, many companies thought they could never have their people operate from home, let alone use “hoteling” and not have a fixed and expensive dedicated place such as private offices for staff to work and be productive. It would be impossible.
If the lightbulb hasn’t quite come on just yet, in just a very short time, most will realize that is just not true. They will find productivity and management work-arounds. Those who have not initiated a video conference before will learn how quickly. Some will acquire better monitors or scanners for home use. Nearly every office worker who is able to work remote will enjoy the immediate benefits of “no commute”. I doubt if anyone will question the ability to operate this way again. And office space requirements are going to change forever.
Especially if this quarantine lasts for many months, as it very well might, working from home will actually become a habit and the norm rather than the exception.
Long term, some businesses will realize that they can operate without any physical offices. Most, I think at least until the older generation retires, will simply have a “place” where people can go in to have meetings and collaborate occasionally, and for those with small kids or inefficient work-from-home setups to go.
This may seem an unusual view from someone who works for a company that assists hundreds of corporate users to lease or buy office space. However, we realized long ago that our business is not to lease as much office space as possible. That belongs to companies that represent building owners who have space to lease. Our business is “Workplace Strategy” and is generally about helping firms to lease the least amount of space that will most effectively accommodate their business functions.
We also know from having gone through a half dozen or more economic downturns and/or office market collapses that whatever real estate a business had prior to the “event” is probably not the real estate that they will need immediately after it. Some will need more, most will need less, and almost all of them will find improved efficiency in a redesign of how they currently use space.
It is well known that the average office square footage used per staff member has been shrinking for almost two decades. It is why almost every urban and suburban office area has experienced parking shortages. The densification of office space plans further accelerated after the last market crash of 2007 as companies looked to minimize real estate expenses.
It is about to happen again. The upheaval of the economic system will cause an overall reduced demand for space. But more significantly, the normalization of productivity via remote work will have an even greater long-term impact. We won’t all wonder if we can operate remote effectively, we’ll know that we can from experience.
In the same way that you don’t expect your local Starbucks to have a table reserved 24/7/365 for your exclusive use, even if you happen to frequent it every day, many workers will opt to work from home more often so will not require or expect a particular office or even a desk to be available 24/7/365 for their occasional use.
Will the commercial office market collapse? Let’s put that in perspective: Any collapse in demand and rates will be temporary and part of a recurring cycle. Economic downturns reduce demand for space, and this time the market will feel a double-whammy as work-from-home becomes a standard operating procedure for nearly everyone. It is a little early to make predictions with certainty but, if history can be relied upon, commercial office market rate trends will generally follow the stock market with a 12-18 month lag.
Certainly there will be an old school mentality among some workers who will not be persuaded. However many more will likely not only adopt but welcome a new work methodology. Companies will still want, at least for now, a private place for their staff to work and collaborate and even occasionally meet with clients.
But how companies use office space is never going to be quite the same again.