I thought that the order to shelter in place due to COVID-19 would create a wave of office employees who would learn that working from home was preferable to working in an office, which would in turn reduce the need (and hence the demand) for commercial office space. I was only partly right.
Certainly some businesses can function effectively with fewer people working in business offices. For instance, Facebook announced that it would allow new employees from outside California to work remotely. Facebook also indicated that salaries would be scaled to the cost-of-living in the areas in which its new employees reside. At the other end of the spectrum, Google indicated that once its staff was able to return to their offices, Google expected them to return to their offices and no longer work from home.
The major difference between Google and Facebook is that when Google absorbed Yahoo, it also absorbed a culture that was based on people working from home rather than from Yahoo’s offices and the corporate culture was difficult — if not impossible — to impose. So Google has not be agreeable to employees working remotely.
I foresee two changes to the commercial real estate market arising out of the pandemic: On one hand, some businesses will have less demand for commercial space, while on the other hand, those businesses that require office space will likely experience a demand for even more commercial office space. Those offices which can operate effectively without staff onsite will likely downsize their offices at the earliest opportunity. Already we are seeing leases which were negotiated but not entered into before the shutdown being terminated or revised; we are seeing rent for larger space not being paid and litigation being filed.
On the other hand, those offices that need to keep staff onsite will likely increase their office space to ensure that they can practice social distancing when necessary. When social distancing is necessary, such businesses will need to ensure that its employees are neither sharing workspace in a way that jeopardizes their health, nor allowing for cubicles to be “checked out” as the space in which an employee will work for the day. There may be assignments of lockable desk drawers which then can be moved as space requirements cause employees to be assigned and reassigned.
I am particularly interested in seeing how companies that pride themselves on their size — such as law firms and accounting firms — will deal with this dichotomy. Part of the stature of some firms is the ability to provide all necessary services by merely walking down the hall to the resident expert in a particular area. Will emailing, using Microsoft Teams, Zoom, or calling such experts have the same impact?
There’s another consideration on either side of this issue: Will there be any liability for people brought back into the workspace? Will offices be sufficiently cleaned? Will staff need to wear masks — all day long? And if cleaning and mask-wearing protocols are not observed, will there be liability for the employer or on the building management?