What is an office for?

What started off as a 2 week Corona Virus stay in place order is now a 7 month Pandemic with still no official end date in sight. Most of us who go to work at an office have had major changes to our routine since March. As a commercial broker, I have conversations daily about office space and how it will change moving forward. I recently read a very good article in the Harvard Business Review (HBR) that wrestled with the question, “What is an office for?” and I thought I’d share it here.

Office spaces have been changing for a while now. As an example, the amount of square feet per employee has been one of those changes that has been trending down for over 10 years. Another trend is the move toward open office layouts. The second trend isn’t necessarily tied to the first but is being pushed for multiple reasons, one is the reduce the square feet per employee and the second is to create more collaboration. These are only two examples but they have been taking shape for at least 10 years. With Covid, we are now changing how we view our offices and these changes have been implemented in just 7 months. Furthermore, these changes haven’t necessarily aligned with the trends over the last 10 years. According to the HBR article, the pandemic has pushed “office away from a productivity space to something else – both a learning space and a space to solve complex problems.”

The pandemic has pushed “office away from a productivity space to something else – both a learning space and a space to solve complex problems.

Scott Berinato – Senior Editor at HBR

HBR interviewed Magnolfi Astill who is a consultant that focuses her work on tech offices that involve human-machine collaboration. Ms. Astill started by saying that Covid has been a “forced experiment” on remote work. It is basically an emergency and everyone has had to get on board. The shift to remote work has gone better than expected. In fact, a recent survey suggests that 75% of workers are able to focus effectively on team and individual activities in the current context. The result is not surprising but people are working more hours everyday. Covid’s effect will likely remain and result in permanent changes in our perception of workspaces in terms of the four primary work modes of an office: focus, socialization, collaboration and learning.

Covid’s effect will remain and result in permanent changes in our perception of workspaces in terms of the four primary work modes of an office: focus, socialization, collaboration and learning.

HBR’s The Big Idea: What is an office for?

Up until now, the spotlight has been on “focus” work but the collaboration aspect of work have been redefined as well. Collaboration, or “socialization” as the article notes, adds value to the bottom line as well. As we spend more time in this new office environment, “people are realizing that they miss things about their workspace that have little to do with production.” The “socialization” aspect of work has value and it isn’t as easy to pinpoint the value that it brings, but the value comes into play when you look at a company’s ability to innovate. If you have employees in the office, the collisions that happen result in more creative output and better problem solving. Furthermore, socialization also has an impact on employee engagement and happiness, which is directly tied to employee retention. We can’t say that the office is dead because socialization can have a very positive impact on innovation, problem solving, creativity, happiness, and employee retention.

We can’t say that the office is dead because socialization can have a very positive impact on innovation, problem solving, creativity, happiness, and employee retention.

According to Ms. Astill, “from my research and others’, we know that remote teams benefit from physical interaction by coming together at least once a year to solidify social bonds that then improve teamwork. We know that if people are more than 90 feet away, they are effectively not in the same space, so we can design a workspace that get those people to collide and interact more. People naturally absorb a great amount of information about our environment and each other, including nonverbal cues, when we are interacting in the physical world. This improves communication, trust, and performance with team members an allows us to establish and cultivate richer working relationships, increasing the value of human work altogether. I continue to believe that the pandemic is distilling for us the value of workspace. It’s given us a meaningful perspective on what we do and what we value in an office.”

I continue to believe that the pandemic is distilling for us the value of workspace. It’s given us a meaningful perspective on what we do and what we value in an office.

Magnolfi Astill

To determine what an office is for, you have to ask what drives your productivity. With quantitative and qualitative data, you will be able to see what activities are driving your revenue results. Larger companies with multiple office locations are going to want to optimize their foot print so this exercise will be a common one in the future. One hurdle will be the newfound flexibility and autonomy that employees have found so employees will likely want to retain that if their role is brought back in the office.

Ms. Astill suggests that we look at office space as a “bundle or an offering” Think of your cable TV options as the example. Covid has put a microscope on office leases and companies are evaluating what is important and what can be eliminated. The article referred to the office “bundle” was as “space applications” which was said to include: “individual focus work, meetings, working lunches, team collaboration, creative play space, operations support, etc.”

A quick application might evaluate “which components of the workspace bundle will we want to come back and which ones can we do without? For example, individual focus work might not be a useful part of the office moving forward, because now that people are technically set up, they can perform better at home. At the same time, companies will still need physical workspaces for certain functions that require interaction in the real world.”

Companies will still need physical workspaces for certain functions that require interaction in the real world.

Magnolfi Astill

What can we expect for the future? Our sense of what is possible has changed and we now have significant new insights into what we value with work and our time. We will likely see new ways or working together with the digital side coming first and then later in the physical space. Perhaps envisioning our future workspaces starts from acknowledging the “workspace” is no longer just a physical office building but also the digital/virtual space where work happens. This may mean that future workspace offerings will come with come physical-space applications and some digital-space ones as well.

With all of this, it is also very likely that these changes will ultimately affect the leases that are drafted and signed in the market place. The timeline is somewhere in the neighborhood of 12-18 months out and in the meantime, the corporate real estate scene will likely start shedding excess space to reduce their portfolios to save money, and short of leases expiring, companies will have to sublease their spaces which we are already seeing and the result is market rents will be on the decline for some time to come.

If your company is considering what options are available, please don’t hesitate to give me a call at 510-915-7645. As a member of Lee & Associates Corporate Solutions team, we are working with companies on a national level and I would be happy to review your current situation and make recommendations on how you can save money by reducing your real estate footprint.