Amid COVID-19, many companies are rethinking what their offices will look like upon reopening — if, in fact, they do. Between companies moving towards a primarily remote workforce and an unclear indication of if or when their employees will be able to return to their desks, the questions of where and how people will work in a post-pandemic world have become surprisingly relevant ones.
For now, many major companies have pledged to remain in a primarily work-from-home model. “A lot of people have learned that they can work at home, or that there’s other methods of conducting business than they might have thought from what they were doing a couple of years ago.” Warren Buffett, CEO of Berkshire Hathaway said at the company’s annual shareholder meeting earlier this month.
So what can we expect when we return to the office?
Flex will become the new normal
When there is a return to normalcy, the question becomes “What will the office — or lack thereof — mean for the American worker?” Experts believe that “flex” work will likely be the dominant model. “I predict more companies will have a flexible policy. Work from the office when you want and work from home when you want,” Jonathan Wasserstrum, CEO and Co-Founder of commercial real-estate company SquareFoot, tells InsideHook. “There is an increased desire for flexibility. I believe that flexible space as an offering is going to increase in the coming years.”
Investment Bank Morgan Stanley, which employs 80 thousand employees, has voiced the possibility of a long-term flex work policy as well. “Can I see a future where part of every week, certainly part of every month, a lot of our employees will be at home? Absolutely,” Morgan Stanley CEO James Gorman said in an April interview with Bloomberg News. And Gorman understands the need personally — he contracted COVID-19 and has since recovered.
In Silicon Valley, Twitter CEO Jack Dorsey recently announced that employees will have the option to work remotely “forever,” and Facebook recently adopted a similar policy. The majority of the American workforce is behind this idea: 55 percent of workers believe their industries can flourish under a primarily working-from-home environment according to the latest Linkedin Workforce Confidence Index.
“In the future we can think about working differently, that it’s not completely tied to the office. However, I do not think that everybody is going to be working remotely,” Nancy Rothbard, professor of Management at The Wharton School of Business at The University of Pennsylvania, tells us.
Companies like insurance provider Nationwide are already moving to a more flexible policy, and cutting back on real estate to accommodate it. The company announced a new hybrid work-from-home model at many of its main campuses. In the longer term, this could prove a huge boon to the co-working space market.
Co-working spaces will boom
Experts believe that in the long term, people will want to get back to an office because of a desire for a workplace culture — even if it’s not enitrely their own. “Building community in person is important, and as time goes by more people will want that,” Gretchen Spreitzer, Professor of Management and Organizations at the Ross School of Business at The University of Michigan, tells InsideHook. “People will crave a professional setting with their work, and the question is if companies are going to cut back on their real estate, what’s the alternative?”
That said, the change won’t happen overnight. Real-estate advisory firm Newmark Knight Frank predicts co-working spaces will face a challenging time adapting to public-health needs and the changing dynamic of the workforce. “Asset owners would be well served to determine how to capitalize on what is likely to be a challenging environment for co-working firms — their amenity-rich format likely will remain appealing to tenants even if their space-sharing model is less so,” the firm outlines in its 2020 National Office Market Forecast.
“Companies may find that it gives them a lot more flexibility to pay for some desks at a co-working space for workers if they choose rather than space in their physical office,” Spreitzer says, adding, “It’s much cheaper than paying for large swaths of office buildings.”
For example, an office space in Midtown Manhattan runs about $88 per square foot per month, according to Statista. A dedicated desk at a WeWork in the same neighborhood can run around $800 a month. “The question is [whether WeWork is] the company that is going to take advantage of that, or are they too far down a path with their other issues that they can’t come back from? More and more companies want more and more flexibility,” Wasserstrum adds.
“There is a whole range of what co-working spaces can offer too.” Spreitzer says. “This could actually give WeWork a chance to rebound but their reputation.” As a brief refresher, WeWork has been plagued with controversy in recent years, which led to their CEO Adam Neumann stepping down, a postponed IPO and rounds of layoffs.
“We will see a chance for new co-working companies to blossom in the space in the coming years, companies that have been in WeWork’s shadow. They could be one-offs or they could be larger spaces like The Wing,” Spreitzer adds.
The Wing has also faced an uphill battle. The co-working company, which primarily serves women, faced a discrimination lawsuit in 2019. “This will open the door for more places that only cater to tech workers, or social conscious non-profits or the like,” says Spreitzer.
Many of these co-working spaces may annex space that was formerly held by a single company. “I think that co-working spaces could also pop up in existing office spaces as companies try to get out of their leases,” Spreitzer says.
More and more companies have called for shorter-term leases in recent years, which Wasserstrum’s Squarefoot has capitalized on: the company acquired PivotDesk in 2019, a service that allows companies to lease out free space in their offices to small businesses and freelancers. “We’ve seen companies who are looking for space opt for shorter term leases” he says.
There’s also a market for on-demand workspaces, where you can rent by the day or even the hour. “Those who still opt to work remotely and not from co-working spaces will opt for workspace on-demand, for meetings and such,” says Trevor Blake, author of The Secrets To A Successful Start Up tells. Companies like Regus currently offer meeting-room rentals for exactly that purpose.
The self-employment economy will surge
Co-working and meeting-room spaces on demand won’t just see a boom from companies moving remote, but also because of the rise of self employment. Amid massive layoffs and decades of growing pay disparities between average workers and C-suite executives, many are opting towards self-employment, freelancing and independent contracting work.
“With all these layoffs, now people are getting the chance to rethink what work is and really make a change to adapt to the future of the economy. It was coming, but now it’s here,” Blake says. “In such a volatile time, self-employment is really the only thing you can do to take control for yourself.”
This trend was well underway even before the spread of COVID-19. According to a study commissioned by UpWork — a network that connects with employers with freelance workers — the majority of the American workforce will be freelancers and independent contractors by 2027.
Earlier this month, Upwork released its first-quarter financial results, boasting revenue growth of 21 percent year over year to more than $83 billion. “With the global spread of the coronavirus significantly accelerating the adoption of remote work and increasing the value that companies place on workforce flexibility, Upwork’s solutions for customers are more relevant than ever,” Hayden Brown, the company’s President and CEO, said in the earnings call.
And Patreon, which allows consumers to directly pay creators for content via subscriptions, has seen monumental growth since the COVID-19 outbreak began. In March, the company announced that nearly 50 thousand new creators signed up for the platform. “We’ve seen a large increase in creator launches since March 13 [the day President Trump declared a national emergency]. Creators are launching on Patreon faster than at any point in the company’s history,” the company said in a statement.
Internally, Patreon’s staff hasn’t fared well through the COVID-19 economic downturn. The company recently laid off 13 percent of its workforce, making clear — with no small hint of irony — the reasons why more and more Americans are choosing to self employ. Co-working companies have long touted being an ideal environment for the self-employed workforce: “I expect this could be a good moment for co-working companies and I expect new ones to pop up soon” Blake says.
Change is clearly coming to offices around the globe. The question that remains is whether businesses and workers will embrace this new economic era or cling on to the mores of the past. It’s an existential problem that may very well define who booms and who busts in the decade that lies ahead.
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