What Does Return-to-Work Look Like for Anxious Building Owners?

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Landlords step up tech amenities as return-to-work accelerates

Office landlords who thought they had plenty of time to prepare for a gradual return to work may need to make some big moves now in order to stay ahead of the curve.

The return to “normal” may be a lot closer than many anticipated. President Biden announced recently that the U.S. would have enough COVID-19 vaccinations for every adult by the end of May. States across the country are continuing to ease restrictions, while Texas and Mississippi in particular have made bold moves with announcements that they will allow businesses to fully operate with no capacity restrictions. What that means for landlords is that they need to accelerate their own strategies to prepare for what will likely be a growing wave of people who are hanging up their joggers and dusting off their office attire as they head back to the workplace.

Despite the comforts of working from home, many people and companies desperately want to return to the physical workplace. Goldman Sachs CEO Gordon Solomon recently said in a virtual financial services conference that working from home could not replace the value of personal connectivity that people get in an office setting. “I do think for a business like ours, which is an innovative, collaborative apprenticeship culture, it is not ideal for us and it’s not a new normal.”  He also went on to add that remote working is “an aberration that we’re going to correct as quickly as possible.”

Another sign that the office market is poised for recovery is that demand for office space in core markets appears to be picking up. According to research from VTS, tenant tours of properties across the country increased by 21% in January 2021. West Coast cities like Seattle, San Francisco, and Los Angeles showed the greatest tenant demand growth, while Chicago and Boston showed the least amount of increase in tenant tours.

Adapting to workplace changes

Remote working reinforced the value of the physical workplace for innovation, collaboration, training and productivity, as well as fostering a sense of corporate culture, belonging and company loyalty. Yet at the same time, the workplace is going to look a lot different than it did pre-pandemic. Not everyone wants to return to work on a full-time basis, and it seems likely that many companies will maintain some level of flexible remote working alternatives – at least for the time being. Additionally, priorities have shifted on the amount of space needed, preferences for locations and the types of amenities buildings need to offer.

What percentage of workers will return full time? Will companies need more, or less space? Will they return to urban centers, or choose suburban locations or satellite offices with less density and more parking? Answers to these questions are still playing out. However, a common theme in the return to work among both companies and their employees is a growing appetite for facilities that offer innovative tech and contactless solutions.

Clearly, there is no “one-size-fits-all” strategy for return-to-work decisions. Views vary widely based on regional differences, the type of work being done and a company’s own unique culture. Research also suggests generational differences in how people have adapted to remote working and their desire to return to the workplace.

For example, younger teleworkers are more likely to say they’ve had a hard time feeling motivated to do their work since working remotely. According to a study by Pew Research, 42% of workers ages 18 to 49 said it has been difficult to feel motivated to do their work compared which rose to 53% of workers aged 18 to 29 vs. 20% of workers 50+ and older. Half of all parents with children younger than 18 say it’s been difficult for them to be able to get their work done without interruptions. That suggests that the work from home experience has some limits and isn’t universally appealing to workers or employers. Building owners are now racing to land a transformed tenant base of employers who expect tech-powered, improved building amenities in order to woo younger, tech-savvy workers back to work and play.

Deploying digital solutions

Industry experts tend to agree that the pandemic has accelerated an evolution that was already underway towards a more tech-savvy commercial real estate industry. A recent Bisnow article noted that there is new interest in hiring an individual – or even entire teams – focused on leading innovation and digital transformations. “The “where” question will become more and more vital as companies in all industries figure out how to return to the office as vaccinations ramp up, and how their real estate footprint will reflect changing notions of remote work and the perceived primacy of downtowns.” As a result, landlords will need to be more “fluent” in changing notions of workplace culture, technology and new norms around how and where office work is done in order to stay at the top of their competitive peer group.

It remains to be seen how the pandemic will impact office fundamentals. However, given a surge in office sublease space emerging in many metros, the expectation is that landlords are going to be facing greater competitive pressures. That pressure includes visibly keeping occupants safe while retaining existing and attracting new tenants as return-to-work momentum grows. Building owners and managers are going to have to pay close attention to who is returning to the office, and what features and amenities are important to those occupants.

Proactive industry leaders are already gearing up for return-to-work with contactless tech and better prop tech solutions from the parking garages to the lobby, elevators and restrooms. They’re also watching and listening to their tenants in order to be nimble, responsive and better serve their returning customer base.

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