Credit: Mint_Images/ EnvatoThe Office Post-Covid: How much space do companies need?
How can investors and asset managers improve their office space for their tenants?
September 22, 2022Real Estate
Since remote work became popular and inflation started rising up across the world, it is very important to understand how employees feel and what they expect in their return to the office. This topic was the focus of the September GRI Global Committee on Future Offices & Workspace 2022.
And the answer is: “We do not know”, at least according to Kate Lister, President of Global Workplace Analytics. But hybrid work already existed before the pandemic, so we can learn from the past and apply it to future scenarios.
She presented the recession as an important player in the return to the office. She argued that many employees will want to be seen by their bosses in order to establish some stability and presence, and said that hopefully, this will bring more light to the asset management costs of unutilized real estate – for companies who already have an office, it is time to go back and make some changes to attract and retain talent.
Research from Kastle shows that offices are seeing roughly 43.5% lower occupation levels compared to the pre-covid period, and the numbers did not change much since February.
Liester argues that the numbers show that, in fact, the occupation before the pandemic was not at 100%. This means that 43.5% is an even steeper decline, which led to the feeling of “ghost towns” for those who returned to office. “43.5% of 50% before Covid, it’s actually 22% of utilization”, she explained.
Subscribe to our real estate newsletter and receive the best market information
Currently, we can see more companies opting for hybrid work. One question raised by Lister concerning the future of office space is what and where people want to do different kinds of work and how this impacts investors, developers and tenants.
For example, one global research from Steelsearch shows that 60% want to do focused work from home, versus 30% would prefer the office.
Also, for collaboration and socializing/networking, the numbers are, respectively, 25% and 22% from home and 49% and 45% from the office.
“This is the kind of thing companies need to know if they want people to come back to offices. And frankly, many don’t”, says Liester.
That is a key point for developers and tenants; listen and understand what employees want in order to provide the best workplace.
The office will need, according to Liester, fewer private spaces and assigned seats, and more small conference rooms, social spaces, lockers, team rooms and activity-based working spaces.
But she also pointed out that people also need privacy and places to focus – this needs to be taken into account when designing an office. “Instead of building a solution ‘one fits all’ that fits no one, organizations are moving to an ecosystem”, says Liester. Therefore, employees can choose where and how they want to do their work.
“Gig economy, outsourcing, IAs and metaverse” are pointed out by her as other influences for the future of office spaces.
Only a quarter, in general, consider their home as the best option. Only 9% of responders choose to work from home when it comes to brainstorming. That is important because it points out that some kinds of work activities, especially in a group, require a physical workplace to get together.
The top reason to go to the office is, in fact, working in groups. How tenants will address this issue and how managers will provide the tools to improve physical workplaces are the questions we should be asking right now.
When it comes to different generations, younger workers have a different point of view on how the workplace and third places (such as coffee shops, work from anywhere and other locations) can support professional development. At least that is what research by Gensler Institute shows.
For deep concentration, 43% of millennials and 42% of Gen X and Boomers prefer the company’s office against 33% (Gen Z), 31% (Millennials), 43% (Gen X) and 50% (Boomers) from home.
It is very interesting to note that Gen X and boomers do not like third places for coworking, although 31% and 26% of Gen Z and millennials are willing to do deep concentration work in such places.
The key takeaways are the need for a healthy workplace ecosystem so people from different backgrounds and ages can choose where they want to do what kind of work – but the physical workplace is still important and will not become outdated and obsolete.
Written by Gabriela Colicigno
The Location Question
One of the questions everyone is asking post-covid is: How much office space do companies need in the future?And the answer is: “We do not know”, at least according to Kate Lister, President of Global Workplace Analytics. But hybrid work already existed before the pandemic, so we can learn from the past and apply it to future scenarios.
She presented the recession as an important player in the return to the office. She argued that many employees will want to be seen by their bosses in order to establish some stability and presence, and said that hopefully, this will bring more light to the asset management costs of unutilized real estate – for companies who already have an office, it is time to go back and make some changes to attract and retain talent.
Research from Kastle shows that offices are seeing roughly 43.5% lower occupation levels compared to the pre-covid period, and the numbers did not change much since February.
Liester argues that the numbers show that, in fact, the occupation before the pandemic was not at 100%. This means that 43.5% is an even steeper decline, which led to the feeling of “ghost towns” for those who returned to office. “43.5% of 50% before Covid, it’s actually 22% of utilization”, she explained.
Subscribe to our real estate newsletter and receive the best market information
Workspaces that match Tenants’ Needs
Before the pandemic, the issue was not that employees wanted to work from home, but that companies were not willing to allow it. During the pandemic, remote work has reached 60-70%, so the paradigm shift is that companies are now more willing to allow some levels of remote work.Currently, we can see more companies opting for hybrid work. One question raised by Lister concerning the future of office space is what and where people want to do different kinds of work and how this impacts investors, developers and tenants.
For example, one global research from Steelsearch shows that 60% want to do focused work from home, versus 30% would prefer the office.
Also, for collaboration and socializing/networking, the numbers are, respectively, 25% and 22% from home and 49% and 45% from the office.
“This is the kind of thing companies need to know if they want people to come back to offices. And frankly, many don’t”, says Liester.
That is a key point for developers and tenants; listen and understand what employees want in order to provide the best workplace.
The office will need, according to Liester, fewer private spaces and assigned seats, and more small conference rooms, social spaces, lockers, team rooms and activity-based working spaces.
But she also pointed out that people also need privacy and places to focus – this needs to be taken into account when designing an office. “Instead of building a solution ‘one fits all’ that fits no one, organizations are moving to an ecosystem”, says Liester. Therefore, employees can choose where and how they want to do their work.
“Gig economy, outsourcing, IAs and metaverse” are pointed out by her as other influences for the future of office spaces.
Why go to a physical workplace?
Similarly, Janet Pogue, Global Director, Workplace Research from the Gensler Research Institute, shows that most top performers do consider the workplace the best place for brainstorming, doing work that requires concentration, and for presentation and editing documents.Only a quarter, in general, consider their home as the best option. Only 9% of responders choose to work from home when it comes to brainstorming. That is important because it points out that some kinds of work activities, especially in a group, require a physical workplace to get together.
The top reason to go to the office is, in fact, working in groups. How tenants will address this issue and how managers will provide the tools to improve physical workplaces are the questions we should be asking right now.
When it comes to different generations, younger workers have a different point of view on how the workplace and third places (such as coffee shops, work from anywhere and other locations) can support professional development. At least that is what research by Gensler Institute shows.
For all generations, the top reason still is to collaborate with the team, but Gen Z prefers working from home to “foster professional & personal relationships”. It was the 10th place, as for millennials and Gen X this comes as the second reason to go to an office.
For deep concentration, 43% of millennials and 42% of Gen X and Boomers prefer the company’s office against 33% (Gen Z), 31% (Millennials), 43% (Gen X) and 50% (Boomers) from home.
It is very interesting to note that Gen X and boomers do not like third places for coworking, although 31% and 26% of Gen Z and millennials are willing to do deep concentration work in such places.
The key takeaways are the need for a healthy workplace ecosystem so people from different backgrounds and ages can choose where they want to do what kind of work – but the physical workplace is still important and will not become outdated and obsolete.
Written by Gabriela Colicigno
