How we office is changing.
What we think:
Take stock of your needs and save money.
Tell us what you think:
Send us an email at email@example.com.
Like a family whose youngest has left the nest, many businesses across the country leasing physical offices (or entire buildings) are beginning to ask, “What do we do with all this space?”
Game rooms and gyms may work for some employers, but others are having to consider unusual questions regarding the post-COVID professional landscape.
Warren Shoulberg reports in a March Forbes article: “The quantitative and qualitative reports already coming out from across business indicate that we’re starting to see the first real signs of how this next phase may play out. At the height of the pandemic last year, it’s estimated that more half of the entire U.S. workforce did their jobs at home, up from single digits previously, according to IDC, a market research company. Emergent Research says that 15 to 18% of the workforce is likely to remain home-based once the pandemic subsides with most workers operating on a hybrid model, with some time spent in the office and some at home.”
So, this is the end of the office? Not so fast, according to Susan Edmondson, president and CEO of the Downtown Partnership of Colorado Springs.
“So far we’re seeing different trends in Downtown than what is occurring in other cities, and frankly that’s because our office market already was so tight and far from being overbuilt,” she told the Business Journal. “In particular: Bucking pandemic trends, Downtown office vacancy into early 2021 stood at 4.5 percent, down slightly from the year prior and almost half that of office vacancy citywide.
“Base rents hit highs at nearly $17 per square foot and gross rents over $25 per square foot. The Downtown and central business district submarket continue to command the highest rents citywide.
“Of course, as leases come up, I’m sure there will be some shuffling and perhaps some subleasing.”
And there is an increase in subleasing, according to Andrew Oyler, office and industrial leasing sales professional with Quantum Commercial Group Inc.
“We’re seeing it Downtown and throughout Colorado Springs,” he said.
But that’s a good thing. Subleasing space is an example of landlords and tenants working together as the pandemic threat wanes and offices reopen. It’s an opportune time for both sides to work together to address and eliminate any kinks. But this is also an ideal time for business owners and CEOs to take stock in of their needs compared to those before COVID-19.
“Take a hard look at realistically how much space you need,” Oyler said. “Can you carve out 30 percent of what you occupy as a cost savings deal?”
Oyler also said it’s worth evaluating which employees work better from remote environments and weighing the benefits of having bodies in the office.
And if you’re looking for new space, Oyler said, consider spots that closest match your needs from the very beginning. Tenants or landlords planning to retrofit space for sublessees or themselves should note: The cost of construction materials, especially lumber, has gone through the roof.
Forbes reported lumber futures alone have increased 375 percent between April 2020 and April 2021.
“If you want to retrofit a space, the cost to do so has gone up dramatically,” Oyler said, adding “And there also seems to be a limited number of contractors.”
Whether your office is implementing a hybrid model or you expect a full-on return of the workforce, now is an excellent time to take inventory of your staff and its needs, reconsider how you office, and explore cost-saving opportunities when it comes to space.
Who knows — you may just find the new normal is more profitable from the start.