We're not in the Jungle!

The value of the office has always been more subjective than objective.? Over my 3-decade long career, I’ve yet to see an objective, data-based analysis which credibly translates the workplace into productivity (or any other metric).? Believe me, the entire office sector has long sought such a measurement, especially one that made it easy to rationalize the office’s considerable expense.? But most companies aren’t even clear about what constitutes value.? Some talk about employee productivity.? Are we measuring net revenue by employee after deducting the expense of the workplace?? Over what period?? Others talk about employee recruitment and retention.? Still others focus on culture.? The truth is, none of these variables is scientifically measurable because they cannot be isolated as a single, causal factor.

While various impacts of the workplace may be difficult to measure with any degree of statistical accuracy, we all know decisions about workplace have a big impact on employees – no PhD required here.? In my experience, companies are mostly careful and thoughtful about how they design their workplace.? The abrupt changes brought on by the pandemic were not intentional or strategic choices, they were reactions to extraordinary circumstances.? It seems natural that now, with the pandemic fading, companies would look to revisit their reactionary workplace strategy in favor of formulating an intentional posture that best reflects the outcomes they seek.? Some have indeed chosen to stay remote, while many have opted for a so-called hybrid approach.? ?

What’s interesting today is the degree to which workplace decisions are scrutinized by employees, and by a small but growing remote-first industry consisting of consultants and those who sell products and services that support remote work.? Companies announcing a return to office are often met with vocal outrage.? Interestingly, their critics claim to have the data (yes, that same elusive, impossible data).? They cite “studies” (typically little more than surveys).? They claim moral high ground, even suggesting it’s inhumane to force people to work in offices.? Without a hint of irony, they label those in the office business (people like me) as being highly biased, untrustworthy, and exclusively focused on feathering our own nests…of course I want to perpetuate the evil office, I profit from it!

I think it’s time for a little less “Best Places to Work”, a little more humility and honesty.? Employers, it’s OK to tell your employees you’re not 100% certain how your choice about workplace will affect the organization.? You’re not – no one is.? Tell them you’ve made an educated guess.? Tell them how you made it.? Tell them what you hope to accomplish via the workplace.? Tell them you’ll continue to monitor progress and listen to new ideas.? Be strong and move forward with conviction (whether you’re fully in-office, fully remote, or somewhere in between – own it!).? Your corporate objectives won’t fully align with each individual employee’s objectives - ever.? Companies are not families, and they’re not democracies.? At their best, they’re more like benevolent dictators.?

Employees, be clear about what you want, how you want to work, but recognize that your employer may not be able (or willing) to meet your exact needs.? If you’re lucky enough to work in a white-collar context in which you offer outsized skill, you’ll have the luxury of choice.? But stop pretending you alone know which workplace posture will unlock your company’s greatest success.? You don’t.? You know what you want, and you think you know what will make you the most productive (although even that is subject to interpretation).?

It’s time to move on to accept what’s next.? Maybe that’s an office, maybe not. ?Let’s dispense with the name calling, shaming, and misplaced moral arguments (for or against). Let’s get back to reality, a reality in which we understand that companies and people make choices, choices which they believe are in their best interests.? This is American business.? We’re not in dark times.? The white-collar American workplace is not a place of draconian struggle.? It’s an office, most with coffee and bagels.? This is not Upton Sinclair’s Jungle.

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Ask TenantSee

Every week we receive questions about real estate; this week we chose the following. If you have a question you'd like us to answer, please send it to [email protected] . We’re contemplating a lease in a building that has a lot of vacancy.? We’re concerned the landlord may be in a bad financial position.? How can we assess its financials??

Boy is this ever a relevant question for the moment!? Most office tenants have been trained to provide financials?to?the landlord, not request them?from?the landlord.? As a tenant, you have the right to understand exactly how your counter party is financed, especially since they’re responsible for the asset which is the subject of your bargain, for which you will pay rent.? Can you reasonably expect the landlord to perform?? What you need to know is this:

·??????? Landlord cost basis

·??????? Current market value

·??????? Lender: Loan value (LTV), debt service, performance, default, special servicing, maturation

·??????? Operating Expense and Taxes

·??????? In-place cash flow

·??????? Capital reserves

These details will provide you with a good snapshot of the landlord’s financial viability.? In markets like present-day San Francisco, the answers to these questions may paint a bleak picture at some assets.? In these cases, you’d learn the equity (landlord investment) is gone – even the loan may be “under water”.? You’d learn that it’s not entirely clear who, if anyone, will fund capital expenses.? You’d learn it’s possible building operations may suffer due to lack of funding.? In short, when you peel back the onion for a struggling asset, you might learn it’s not the place where you want to sign a lease.? Getting all the critical data early in your process is essential to making good decisions.? It’s why we started the TenantSee practice.?