Rent. Not the play (although now I can’t get that song out of my head), but rather the cost of commercial workspaces may be the first casualty of the post-pandemic world. If you have been lucky enough to be employed through all the shutdowns, home isolations, brief reopenings, and shutdown 2.0, then you probably experienced “working from home”. Or as others may say “living at work”.
The trend was not a stranger in the ‘before-time’ of the pre-COVID19 workplace but it also was not always widely accepted. Some companies, mostly those in technology and innovation were well adapted to remote work and having co-workers spread across time zones if not continents. Others, shall we call them more established and mature companies, had versions of remote work but viewed it more as an accommodation. Unless done really well, companies may have inadvertently disadvantaged remote workers (if you have ever been on a conference call where others on-location completely ignore you, then you know what I mean). Further, some companies who built their culture on long hours, hard work, and a highly politicize workplace, may unintendedly shun (shame?) remote workers. Culturally the ‘go-getters’ were measured by face-time in addition to their work output.
The speed at which companies adopted remote work arrangements was impressive following the beginning of the pandemic, as was the response from providers like ZOOM, Google, and even Facebook. Although I admit having a serious meeting in a Facebook ‘Messenger Room’ seems a little odd – better to save those for meetups with Grandma and the kids. Zoom for its part has done quite well. The 2011 startup is expecting revenues to increase 200% to 300% year over year and its stock price has risen nearly 4 times its value since the beginning of this year. Zoom’s market capitalization is $77 billion making it bigger than Ford and Target combined. So, what does all this mean for the future and workplace rents?
JLL research reports that the response in Q2 2020 was swift with a decrease of 53.4% in commercial leasing. This followed a smaller, but notable decrease in Q1 of 20.8%. As a property leasing and management company they are optimistic about rebounds in the second half of 2020 as companies begin to reenter the workplace, but there is more at play than an ‘all clear’ call from health officials.
People are adaptive to their circumstances and the pandemic is a great reminder
I have worked in analytics for much of my career and part of it was following the crumbs of data to understand patterns and behaviors of people. People are adaptive to their circumstances and the pandemic is a great reminder of how, after some disruption, they find ways to carry on with their work. There are some who have newly discovered they can be productive with their work remotely, while also finding ‘lost time’ to spend with their family. Some of that ‘lost time’ is recaptured from their daily commutes as well as experimenting with the conveniences of home delivery for nearly everything from games to groceries. Some of these ‘make-do’ adaptations will be lasting.
The workplace is not dead, but its near future will certainly look different. There is a need for teams at times, to collaborate in person as well as separately in their individual workspaces to focus on their work. Sometimes that means a place where you can be creative, or free from office distractions. Sometimes it means a place where you can plan and share workplace victories with your coworkers. Sometimes that place is all alone in your home office where you can unabashedly sing “five hundred twenty-five thousand six hundred minutes…”. Until then we still need to make an argument for rent, but maybe just less of it than before.
Note: My opinions are my own