February and March 2020 saw history’s largest exodus of workers from offices across the world. Several months later, they’re starting to return – though as a trickle, rather than en masse. In just a few months, the way that businesses and workers think about the office has changed fundamentally – from its location and its layout, to its very purpose. What’s clear is that the office space market will need to change, too, in order to reflect this new reality.
The future is distributed
In the middle of the health crisis, research by Salesforce showed that 60% of the total workforce throughout the USA, Brazil, Australia and several European countries) were working remotely. In a post-COVID world, how many of these will go back to the office?
“Boundaries of time and geography are no longer restrictions [for businesses],” says Alex Swarbrick, regional director, Asia-Pacific at the Roffey Park Institute. “For some businesses, particularly service businesses, those boundaries are now irrelevant and in fact they’re turned to a commercial benefit. For example, having a globally ‘dispersed’ workforce automatically enables 24-hour service and operation.”
This dispersed or ‘distributed’ workforce model could be here to stay. Defined as a workforce that reaches beyond the restrictions of a traditional office environment, it’s dispersed geographically over a wide area – domestically or internationally. Distributed workforces are made up of remote workers, which leads to the terms sometimes being used interchangeably. However, the difference is that, for a distributed workforce, there is no central office HQ. There may be many workplaces – or none at all – to which employees report.
Some predictions say remote or distributed work will equal or surpass fixed office locations by 2025, which is perhaps not surprising when you consider the cost savings. According to Global Workplace Analytics, fully remote workers can save organisations, on average, $22,000 a year per employee. For many savvy organisations, the distributed model will not just be short-term pragmatic: it will become part of their business strategy.
The end of homeworking?
A word of caution to businesses thinking of jettisoning their offices and implementing permanent homeworking policies. While this system worked for a while during the crisis, the experts say it’s not a long-term solution.
“Is it possible that the satisfaction and productivity people experience working from homes is the product of the social capital built up through countless hours of water-cooler conversations, meetings, and social engagements before the onset of the crisis?” asks a recent McKinsey report. “Will corporate cultures and communities erode over time without physical interaction? Will planned and unplanned moments of collaboration become impaired? Will there be less mentorship and talent development? Has working from home succeeded only because it is viewed as temporary, not permanent?”
Rethinking the office
“People have spent a lot of time asking whether we will return to work or not, but that isn’t the right question to ask,” says Logan Nagel, Associate Publisher, Propmodo Research. “The real question is: how will office owners and managers support tenants whose workforces are deeply divided between in-person and remote work arrangements?”
“Offices aren’t going anywhere, but the virus outbreak represents a chance to streamline how they look, feel and function,” Nagel adds. “Across industries, people aren’t going to work from home forever from now on, yet the multitude of workers who do start spending more time out of the office are a transformational force that only good design and planning can truly account for.”
Speaking to the BBC, architect Amanda Stanaway says her clients are increasingly showing signs of interest in the idea of the ‘distributed office’. This would involve replacing a crowded central hub with a distributed set of smaller offices that may be closer to where staff live. “Having small groups of people working collaboratively would address the need for connections and improved mental health, but without risking massive exposure, where one person gets the virus and everyone else has to self-isolate,” she explains.
A transformational approach
In a detailed report, McKinsey suggests a “transformational approach” to reinventing offices is needed. “Instead of adjusting the existing footprint incrementally, companies should take a fresh look at how much and where space is required and how it fosters desired outcomes for collaboration, productivity, culture, and the work experience,” the report’s authors write.
“That kind of approach will also involve questioning where offices should be located,” they add. “Some companies will continue to have them in big cities, which many regard as essential to attract young talent and create a sense of connection and energy. Others may abandon big-city headquarters for suburban campuses.”
The report suggests that a “portfolio of space solutions” could be the answer, including owned space, standard leases, flexible leases, flexspace, co-working space, and remote work. McKinsey’s May 2020 Survey of Office Space Decisions Makers found that this group expect the percentage of time worked in main and satellite offices to decline by 12% and 9%, respectively, while flexspace will hold approximately constant and work from home will increase to 27% of work time, from 20%
There are appealing cost-savings to be made with this approach. Rent, capital costs, facilities operations, maintenance, and management make real estate the second largest cost category for many organisations. “The value at stake is significant,” says the report. “Over time, some organisations could reduce their real-estate costs by 30 percent. Those that shift to a fully virtual model could almost eliminate them. Both could also increase their organisational resilience and reduce their level of risk by having employees work in many different locations.”