The post-covid office workplace - The office is here to stay

When it comes to office space, some prognosticators sound like REM singing the song “It’s the End of the World as We Know it.” These folks have been predicting the end of the office since the widespread development of Wi-Fi and laptops, and now as a result of COVID, such folks are suggesting that the office will go away with companies embracing work from home strategies. However, in the words of one of my favorite college football prognosticators, Lee Corso, “Not so fast, my friends.”

During the COVID crisis, almost anyone who could work from home did. Some folks thought it worked pretty well. However, after months of living on video, I think the novelty has worn off. Many of us are experiencing “Zoom fatigue” – more on that later. In fact, lots of new research is now being published on this issue. For example, two separate studies just released by Cushman and Wakefield and Gensler reveal that around 90% of us want to work in the office again. This is good news for landlords.

Be wary of interpretations that contribute to a narrative that espouses the proposition that exclusively working from home makes sense for businesses and their employees. Let’s examine a few statements and question them in light of recent research.

• True or False: “It costs less for people to work from home.” There is truth that a company can reduce real estate and other workspace amenities to save money. However, one should consider hidden costs in weighing this statement. For example, the office has the potential to provide everyone with space and tools they need to get work done. Working from home requires people to juggle small spaces, family, roommates and pets along with poor equipment and technology. Many studies are showing that efficiency declines when working from home. Employment data consistently is showing that turnover is higher for folks who work from home versus those who work in an office with others. The secret sauce for many companies is collaboration among team members. In person connections are much effective in developing trust and effective collaboration than virtual connections.
• True or False: “People are just as productive (or more) at home as they are in the office.” Many studies are showing that efficiency declines when working from home. While individual task work tends to be up in work from home settings, work from home strategies have resulted in more than a 50% decline in time spent working with others and in collaborating. A recent study at Ford showed that proximity and social accountability boost productivity. “Social facilitation” is a proven concept that shows that people work harder when surrounded by others who work harder. Think of the pit of a Wall Street trading desk for an excellent example of this concept in action. Ask people what they miss most about the office and most will say “the people.” The reality is that people who work from home often feel the least accomplished according to Gensler’s recent issued report.
• True or False: “People who work from home have a better work-life balance.” Working from home does have benefits – no commute, comfortable clothes, greater autonomy. However, the reality is that people who work from home work longer as the line between “work” and “home” blur, and the data reveals other tradeoffs. Employees have difficulty unplugging in a work from home environment. “Zoom fatigue” is real. New studies show that our brains have to work harder to make sense of the limited cues we get on screen since we have to pay more attention to understand facial expressions, tone and pitch of voice and body language. Sedentary work at home can take a toll on physical wellbeing. WebMD’s recent research showed that both men and women gained weight during COVID stay-at-home restrictions. Movement, ergonomics and healthy nutrition are part of wellbeing that people miss while away from the office. Just think the next best seller will be from some doctor entitled “How to Stay Healthy while Working from Home.” Perhaps, the conclusion should be “Go Back and Work in an Office.”

We won’t truly know what the post-COVID office workplace looks like until this pandemic is behind us. But considering the current chatter online, I think it would best to remember and paraphrase, Mark Twain, “the death of the office building has been greatly exaggerated

Thanks Jim Warren for this great article

Disclaimer: All investment opinions expressed here, are from my personal experience which derives from co-investing with RMC, a Family Office with a strong focus on Office Real Estate. Over the last two decades, RMC has managed to build a US$2,1 Bn portfolio and consistently generate strong immediate cash-on-cash returns and an IRR north of 18%. However, what works for RMC, won't necessarily work for other investors.

If you are interested in discussing more about Investing in Real Estate or RMC's Investment Strategy and success record, don't hesitate to ping me on LinkedIn