How COVID, customers and (employee) choice workplace trends in 2022 are driving change

COVID has accelerated fully remote and hybrid working, and we believe those office owners who want to bring companies and their employees back to the office must evolve their thinking about how to create “value”. If they aren’t looking at a fresh 3- to 5-year roadmap through new lenses, they should be.

For office owner/operators the plan to buy low, fill vacancy and sell to a buyer in 5-, 7- and 10-year cycles will likely be altered by the behaviors of their occupiers.  We see driving forces coming from the three C’s - Covid, Customers and (employee) Choice  - affecting the investment environment, asset operations, and actual office space use. The forces at work will necessitate big changes to effectively adjust.

Covid-19. While every segment of our lives has been upended in the last two years from COVID, until just recently the office market seemed steadfast on its traditional conventions. Some owners have innovated by embracing coworking and other agile product types, and incorporated some type of this into their portfolios. Others have even taken steps to to build it themselves. Building lobbies and common spaces have been altered to offer the coffee-shop retail appeal that WeWork and Industrious have already well honed. Has this been enough to bring people back to the office during a time many have worked effectively from home to the surprise of their managers? Probably not.

Something more dramatic that isn’t as easily recognized has transpired quietly. Work has now  become a verb, and—this is unprecedented—is no longer tethered to any kind of physical location. Further, this isn’t even close to being over as the digitization of company infrastructure keeps advancing. Owners need to offer the businesses that still use physical real estate for officing purposes something that ensures the “office” remains relevant and can act as a magnet for their workforce.  

Customer. Companies are scrambling to offset the “great resignations” with workplace options that the individual elects themselves rather than an option dictated to them. The more choice they give their employees, eventually the less they will need office space to support them. It may not happen overnight, but when that 50,000 square foot lease is up for renewal, it will eventually be for far less space than before. How can this be monetized for owners and not presage a net loss scenario? There are ways—if ownership can get ahead of it!

(employee) Choice. Companies that compete for talent either to recruit to their cause or to keep the talent they have already are at big disadvantage if they don’t offer those employees the CHOICE to work when, where, and how they want to. This is the new reality an owner’s “tenants” are facing every day. The challenge owners must solve to is why THIS office is worth coming into often enough that a customer’s employees will show up without being mandated to.

We do not believe in the “death of the office”—far from it. Change doesn’t scare us. It fuels our innovation at AOR. We know that the “office” fulfills a series of important roles for businesses of all types and sizes. We believe for ownership to prosper in this changing market owner/operators will need to realize they are now competing with an employee’s option to stay home and work or go to somewhere easy to pop over to near their homes. This is very tough competition indeed!

A myriad of influences are at work to shift the buying preferences of the end-user; a deeper understanding of the implications is mission-critical toward developing an effective response that helps an owner stay commercially relevant. We are clearly moving into territory the likes of which no one has ever experienced before.