This Is Not The End Of Office Real Estate
Myriad publications have already pronounced office space a trend of the past as a result of the coronavirus pandemic. The most publicized reasons focus on a postapocalyptic world where people do not want to be around people: Office buildings contain UV lights to disinfect all areas at night, and employees are placed into rooms with glass dividers and do not even think about an office social gathering. Commercial real estate services firm Cushman & Wakefield went even further by introducing a new concept called the “6 feet office” in the Netherlands. In this concept, employees are kept at a six-foot distance and assured by a certificate stating that all measures have been taken to implement a virus-safe office.
The second-most mentioned argument is that people are getting used to working from their homes, and companies will want to save money by allowing their employees to continue working at home. The argument goes further, noting that as the technology is developing and employees are getting used to work-life flexibility, they will want to work from home. This idea sounds like a win-win: Companies save money on real estate by using expanded office space or employees’ homes, and employees have a better work-life balance by working from home.
While this crisis will have an impact on real estate, and office space will be reimagined, this health crisis is not an event that I believe will make offices irrelevant. In the past few years prior to the pandemic, we learned a lot about what building occupiers crave in their workspaces. Employees thrive on daylight, community, active living and nutrition. The most popular and best performing buildings contained large windows, community managers that scheduled group meetups and idea exchanges, yoga classes, and nutritional education. Why did these concepts attract us to lease space in new modern buildings? Because humans are social beings who crave physical connections.
Postapocalyptic office space will not work because it does not foster what humans need. Humans thrive off each other; we mirror emotions and body movements. We study people’s faces. We hug for comfort, and we exchange ideas and grow by playing off our peers. Office buildings, much like restaurants and cafes, are vehicles for social interaction. It is not a coincidence that the office and café/bar cultures were merging before cities went into lockdown.
By isolating ourselves, we are potentially creating another form of disease. Science has demonstrated for decades that social interaction is critical for mental health and longevity. According to one study published in the Journal of Health and Social Behavior, both the amount and quality of social relationships one has impacts their mental health, health behavior, physical health and mortality risk. People who are persistently lacking in social contacts are more likely to experience elevated levels of physical stress and inflammation, which in turn affects bodily functions.
Preventing the increase in mental health problems will not happen in a glass box office. Quite the contrary, work-centered mental health problems may instead be reduced by innovative design that will provide employees with a space that promotes focus, increases social interaction and reduces stress and anxiety. Office space of the future will not be a room full of glass dividers, but a carefully designed space that will protect the physical, mental and social well-being of our workers.
Secondly, home offices, no matter how plush, are not an ideal work environment for all workers. As Stanford economist Nicholas Bloom pointed out, many people do not have an adequate office and are working in their bedrooms or shared common rooms, with noise from their animals, partners, family or roommates. Constant distractions from family members, thermal comfort, sounds and poor nourishment contribute significantly to the mental overwhelm of workers. In a new data analysis by Aternity, U.S. worker productivity dropped by 7.2% with the pandemic-prompted instruction to move all possible workers remote in March 2020.
The idea that the home office stifles productivity and innovation is not new. In 2013, then-CEO of Yahoo Marissa Mayer infamously banned working from home. The memo to employees reads in part, “To become the absolute best place to work, communication and collaboration will be important, so we need to be working side-by-side. That is why it is critical that we are all present in our offices. Some of the best decisions and insights come from hallway and cafeteria discussions, meeting new people, and impromptu team meetings. Speed and quality are often sacrificed when we work from home. We need to be one Yahoo!, and that starts with physically being together.”
Her move was widely publicized as a productivity killer that had no room in Silicon Valley. However, months later, it was revealed that her decision was made based on data showing that remote Yahoo employees were not all logging into the remote network to do their jobs. In Yahoo’s case, working from home stifled some workers’ productivity. But moreover, it also removes the social interaction that gives us energy and makes teams feel more cohesive.
While technological achievement has improved the remote work experience, it is not a replacement for human interaction. Humans will still crave interaction, and companies will still look for innovation. Our job as commercial real estate professionals will become focused on how to create well-designed, healthier office spaces that foster innovation and human interaction.