The End of the Office as We Know It?

Ilya Stupin

According to experts, less than 50% of office employees would like to return to their offices. The rest are ready to work from home even after the situation with the pandemic has stabilized. They want to work at home all the time or more often than they used to. They are motivated by financial savings (no more spending for lunch and transport) and some environmental benefits.

It seems that not only office employees, but also employers are ready to use the ‘home work model’, more actively than early. Managers are realizing that people aren’t slacking off (and, in fact, are sometimes working longer than in the past). Remote working is the way to decrease costs on real estate and office overheads. Also, companies now have an opportunity to hire staff from anywhere. This offers employees an additional chance to decrease average salaries.

Office property owners are concerned.

Firstly, the philosophy of office life is changing. Offices have been trending toward open workspaces for over a decade. Employers have been looking to boost collaboration and trying to maximize their use of space. Companies wanted to cram more people into the same area, so they took away ‘me’ space and increased the ‘we’ space. Now companies will emphasize a greater focus on health and welfare and less so on ‘togetherness’. Employees are already re-envisioning the workplace. For example, they decided to use some new office furniture such as permanent wall dividers, cubicles, ‘sneeze guards’ (sheets of plastic separating employees space – plexiglass dividers or kind of cough shields), social distancing sensors, and сameras. Companies like Amazon are using short-term measures like thermal cameras to detect employees with a fever.

Secondly, tenants are putting forward new requirements to infrastructure and engineering systems. Ventilation systems should be adjusted to bring in more air, as most are currently set to adhere to standards geared toward energy efficiency rather than health. Companies want to use the contactless office concept. For example, employees could eliminate the need to press communal buttons by using their smartphone to send a command to the elevator or staff coffee machine. Conference rooms could be fitted out with voice-activated technologies to control lighting, audio and visual equipment.

These measures are leading to a situation where the office may resemble more a place out of a dystopian movie, but they aren’t very comfortable for working. Also, it raises huge privacy issues. In addition, re-equipment of the office is too expensive. New furniture can cost several thousand dollars per employee. Some companies just do not have the resources to invest in new office furniture, especially as they navigate through a challenging recession. It is not clear now how effective and appropriate these costs will be over the long term. For example, thermal cameras do not detect asymptomatic carriers of COVID-19. Vaccine would make social distancing tech redundant. In this case, some solutions won’t be relevant a year from now. No one is willing to invest a significant sum on solutions that could be rendered ineffective in 6-12 months’ time.

Sometimes measures look stupid. Some commercial real estate companies (for example Cushman & Wakefield) are trying to create best practices for offices using the experience in China as a model. In particular they suggest using a mouse and keyboard on a big sheet of paper. But there is nothing more frustrating than doing that, because paper will slide on a desk!

Some real estate market players console themselves with the fact that safety protocols could cause more demand for office space so that the people who work there aren’t as packed in as they used to be. But that is crazy. There is a very high probability that in this situation many companies will prefer to give up offices in favor of working at home. Business has already understood that working from home is as productive as the traditional office. “We have a whole bunch of jobs we thought could never be done remotely and we’re finding they can be – and it’s going pretty well. The genie is out of the bottle and it’s not likely to go back in,” very senior people are saying.

Globally, about 60% of Google employees will be allowed to come into work once a week by the end of the year. The company will start by bringing 10% to 15% of workers into the office at any time. By the end of the year they expect to reach only 20% to 30% office capacity, so employees can rotate in and out. But the majority of people will still be working remotely.

Tech companies have been one of the first groups to adapt to working remotely. Twitter and Square will allow employees to work from home permanently, taking a more liberal approach. The majority of Facebook employees will be allowed to work remotely until the end of 2020.

Large majorities of workers in consulting & research (85%), insurance (84%), advertising and marketing (73%), finance and financial services (70%), legal (68%) industries have been doing their jobs remotely as a result of the coronavirus outbreak, according to CNBC|SurveyMonkey data.

Global Workplace Analytics estimates that 56% of U.S. workers have jobs that are at least partially compatible with working remotely. Some Russian construction companies and banks have announced that they intend to switch most of their employees to home mode and reduce their rented office space.

Experts say there will certainly be an acceleration of existing trends in office real estate, including a move away from traditional 5-year leases to shorter leases, or for flexible or coworking space.

The lost demand can partly be compensated for by state-owned companies. Many employees of such structures need offices as they have special equipment installed in them. However, this will not be enough.

Of course, changes in the market will not happen tomorrow. Those who signed long leases a few years ago are legally obligated to meet the terms of those leases. But there is no doubt that the office market will probably look pretty different next year. This is the end of the office as we know it.