What’s The Future For Commercial Real Estate? An Expert Weighs In
Jonathan Wasserstrum is the Founder & CEO of SquareFoot
Over recent weeks, all of us have had some adjusting to do with their work setups. Office spaces suddenly, seemingly overnight, became unsafe places to be, in the wake of a global pandemic. For some workers, this shift to work-from-home operations was a win. And companies that had made similar moves away from traditional office spaces looked on and said, “What were you waiting for?” I witnessed all of this chatter happening over the past month, in the shadows of an ongoing health scare that terrifies us all. However, I believe that the noise around office spaces going away is misguided and shortsighted. The truth of the matter is this: Commercial office building landlords, on the other side of this scare, will have to grapple with putting back together the pieces, and will definitely be rethinking how and who they lease to. Yet, this will not be the end of the industry as we’ve known it. Here’s why:
I’ve tried my best, as the owner of a growing business, to keep everything together for myself, my team, my clients, my investors, and more. We’ve done a good job at it, too. But if I’m being honest, not everything is perfect. Far from all is the same. And I have a new set of concerns that have emerged over the couple of weeks we’ve been working remote. It’s impossible, even for the most valiant and virtuous teams, to replicate the same successes they have seen in the past. Well-intentioned workers are producing less. The uncertainty of the economic climate contributes a mitigating factor. New business isn’t walking in the front door the way that it was not long ago. While this experiment began with enthusiasm for many getting to work in their pajamas and to play with their dog during the day, the conversation has quickly turned into a growing collective desire to get back to the way things were. As a result, a reliable office space separate from your home has become arguably more desirable than ever.
At the same time, we must pause to recognize that this prolonged period of working remotely has fundamentally shifted the cultural conversation around flexibility with work. My prediction therefore is that the truth will land somewhere in the middle. People at all companies may not return to work in the office five days a week, and they may not return to the same 9-to-5 schedule they had grown accustomed to, and they might not have a permanent, dedicated seat at the office in accordance with this shift, but those are growing pains that they and their managers can work through. We anticipate that things won’t immediately go back to the way they were, with employees gaining more leverage and applying more pressure than before in discussions with their company executives about giving them a more ideal process and procedure to succeed in all elements of their lives. If there’s one area of improvement that we’ve seen here in the U.S., it’s more families having dinner together on a nightly basis as a unit, with both satisfied parents home and removed from distractions. This luxury is not something people will want to lose any time soon. For their own sake, and for the sake of their families.
With more people pushing for flexibility within office policies, you’ll begin to see more company owners encouraging landlords to meet them where they are in their thinking. Already, the coworking companies had led a sizable shift in how landlords think about dividing up their spaces, and how many employees can be squeezed into one area. The next stage of this industry’s development may look something like this: It’s been rumored for many decades, but perhaps now we’ll see a rise in alternative seating patterns within offices that depend on hot-desking or hoteling to supply the ‘right’ number of seats and amount of space better-suited to the everyday needs of the company. As a business owner myself, I can say that empty seats that I know we’re paying for with every monthly rent payment can be an eyesore. You’ll rarely have a perfect count on any given day, but I know that for startups that are budget-conscious they would prefer to have one or two staffers sitting in an overflow area – on a couch or a barstool – than to have several empty desks on a regular basis. Companies must grow deliberately and thoughtfully in all aspects of their planning, and it’s about time that we take office space needs seriously in the same vein. It’s not as simple as giving 50 seats. Perhaps a company might be better off with 30 seats for its 50 employees in that given office? We see a rise in those types of conversations coming, stemming from an informal campaign from more employees seeking a more friendly work-from-home situation. The companies that offer this kind of and larger levels of flexibility could wind up being known as the more competitive places to work, especially for the category of veteran employees who have large families to think about and care for. Taking some responsibility for and giving genuine care for employee welfare is a mounting concern for many company founders.
This emphasis on flexibility will go one step further, though. Founders have never really wanted to be tied down by a long-term office lease; it was always deemed a necessity. Some landlords were already beginning to think along these lines, especially in the wake of what coworking companies have built on top of their real estate. We see that trend accelerating in 2020 and going forward. Over recent weeks, at SquareFoot, the company I own and lead, we’ve heard from more landlords than we had been working with in the past about how we can help put the right companies into their spaces, quickly. Over the past year, we’ve been leading this conversation, championing the virtues and values of flexibility for people in need first of a comfortable lease ahead of all other factors (neighborhood, view, commute, and more). We have two flexible office solutions we offer: PivotDesk, which is like airbnb for office space and pairs a host with a guest to share a space, and FLEX, which gives people the chance to get the office space they want with the lease they want. Both of these options require us to have good standing and good working relationships with landlords, but all of these variations and deviations from the norm of the traditional real estate world require first for the landlords to step up and say they recognize that the times have changed. The conversation has already changed.Last modified: April 1, 2020