Betting on the return to the workplace
As the pandemic has persisted, Silicon Valley tech giants have extended their telework timelines — and some have even said that employees can stay home forever. But now those same firms are simultaneously betting on the future of the office.
Why it matters: Remote work has been successful at many firms, but the vast majority still have strong office cultures. The pandemic won't drastically alter that.
- "COVID changed a lot of minds," says Julie Whelan, of the commercial real estate firm CBRE. "That said, there are billions of square feet leased across the United States, and that’s not disappearing overnight."
What's happening: Office leasing activity in the second quarter of 2020 was down 44% year-over-year, CBRE reports. But it appears to be bouncing back, led by the tech titans.
- Amazon is adding 900,000 square feet of office space in New York City, Phoenix, Dallas, Detroit, San Diego and Denver. And Facebook is expanding its New York footprint with 730,000 additional square feet in midtown Manhattan.
- Amazon is also in the middle of building two large complexes to complement its Seattle headquarters. Its Hyderabad, India, building is 1.8 million square feet, and its Arlington, Virginia, campus — HQ2 — could be as big as 8 million square feet.
The tech giants' bets on the importance of the office appear to be shared by other big firms.
- Per a CBRE survey of 126 companies, half of which are Fortune 500 firms, 70% are confident in setting long-term real estate strategies even amid the pandemic.
- 79% say the importance of the physical office will decrease slightly or remain the same when the coronavirus crisis is over.
- And teleworkers across the country say they’ve developed an appreciation for the workplaces they once griped about.
But, but, but: While the pandemic won't kill offices, its effects on where and how we work will linger.
- Look for many companies to pursue a hybrid of work-from-home and work-from-office. 61% of CBRE's respondents say employees will be able to work remotely at least part of the time in the post-pandemic world.
- That means those firms won't need as much space, and many will downsize.
The bottom line: "We’re changing why we need an office: It's the social interaction," Whelan says. "That doesn’t need to happen five days a week. But it still needs to happen."
- As Jerry Seinfeld writes in his defense of New York City, "Energy, attitude and personality cannot be 'remoted' through even the best fiber optic lines."