There's No Silver Bullet Amenity To Lure Workers Back To The Office
For months, ads and sponsored content have popped up all over parts of the internet dealing in commercial real estate claiming to provide amenities or design changes that will lure workers back to the office.
None have been proven to work so far.
To date, American workers are mostly not being enticed back to the workplace. From mid-October to the week ending Nov. 10, average office occupancy across 10 of the country’s largest markets has ticked up only slightly, from below 37% to 39%, according to card swipe data from Kastle Systems.
Not enough employees have returned to in-person work for any strategy to be considered a failure or a success so far, said FTI Consulting Managing Director Rob Raymond, who advises companies on real estate and workplace strategy.
“The jury is still out on that, because a lot of workers haven’t yet returned, while landlords and tenants are still figuring out what to offer,” Raymond said.
So far, discussions between office-occupying companies and their employees have centered around the relationship between the two, multiple sources told Bisnow. Most companies that anticipate enforcing at least part-time in-person work plan to enact mandates early next year. That seems to be the only way to guarantee a major uptick of bodies at desks and in seats, said Cresa Managing Principal Peter Sabesan, whose company specializes in commercial tenant representation.
“A lot of companies I’ve spoken to are saying to employees, ‘If you don’t want to go back to work, it’s your choice,’ and they’re giving a lot of leeway,” Sabesan said. “But particularly in the first quarter, companies will start saying that you’ll lose your job if you don’t go back to work.”
Other industry experts say that in a labor market with more jobs available than candidates to fill them, the only way to successfully run an office for a workforce that prefers to work from home is offering some sort of hybrid schedule and setup. But the best method for hybrid work likely won’t be discovered until at least some enforcement takes the place of encouragement.
“Employers need employees to return to work in order to determine the effectiveness of hybrid work,” Colliers Vice Chairman Marcus Rayner said.
To the extent that amenities or design enter the conversation, elements that offer flexibility for employees to define their work environments, like a coworking space, would likely have the most impact, CoreNet Global Senior Director of Content Experience Sonali Tare said.
The integration of coworking and flex office space with traditional office can go a number of ways: with a provider like Industrious making a partnership with a landlord, with the landlord operating the space itself for its tenants, or with a tenant simply redesigning its existing space. The third option would only take a few months at most to pull off, making it a viable option in lieu of moving to a new space, Raymond said — provided the necessary materials arrive in a timely manner.
“When clients have decided to make construction changes to the workspace, whether through the landlord or themselves, they have to wait because it’s hard to get, say, lumber or drywall,” he said. “So these physical changes are being delayed longer than what clients want.”
Another potential method of using physical amenities to influence the relationship between employer and employee is to directly involve amenities in healthcare, said Reside co-founder and CEO Komal Kothari, whose company installs small, concierge-style clinics in New York office buildings that can arrange for specialist appointments and work directly with the 10 largest health insurance payers in the state. Health insurance is frequently cited as the most important non-salary benefit workers value in their employers, Kothari said.
“There’s a direct correlation between productivity, retention and happiness, and better access to healthcare,” she said. “Employees are looking to their employers for confidence that they have the best interests of employees at heart. Most large corporate campuses in America have some on-site medical facilities, and Reside is just a similar offering for multi-tenant buildings.”
While that could influence some health-conscious workers, others prioritize socializing and events. That puts an added premium on common areas and gathering space, Raymond said, especially ones that are outdoors or with access to plentiful fresh air, which had already been valuable amenities before the pandemic. Common building amenities rather than private ones for tenants are growing in popularity as well.
“It’s easier to make a meeting more social, to turn it into drinks or to have a little music in a [building’s] common space than an office on the 24th floor that’s all enclosed,” Raymond said. “If as an occupier, I know that I need social or meeting space, I don’t need to factor that into my paid lease footprint if common space is a building amenity.”
At least two major headquarters moves in recent months, both in Philadelphia, lend credence to the idea that common, social space is more valuable to tenants than ever. Rite Aid is moving from a campus in rural Pennsylvania to a 24K SF space in a multi-tenant building at the city’s former naval shipyard, now a pseudo-urban office campus of its own. GlaxoSmithKline, one of the Philadelphia Navy Yard’s most prominent tenants, will be exiting its 208K SF, build-to-suit headquarters there for 46K SF at FMC Tower, one of the most expensive office towers in the market.
Yet both of those companies are moving and downsizing as a result of committing to hybrid and/or remote work, making it difficult to measure the relevance of their strategies for companies that want to do the opposite. For companies committed to the office, their workers’ return will likely have to come before any final determinations on the effectiveness of amenities and design can be made.
In other words, no one knows yet.
“Companies are relying much more heavily on data to optimize space utilization and layouts, so the extent to which spaces are actually being used, and how frequently, will impact space designs and leasing strategies,” Tare said.