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With Return To Work Slower Than Expected, Office Owners Shift Focus From Buildings To People

Office building management has never gotten more attention than it has during the last four months, with issues from touchless access to elevator capacity to HVAC systems suddenly becoming hot topics. 

But now that office owners have taken the initial steps to prepare their buildings for reopening, they are finding the return to work is happening much more slowly than they anticipated. Five major office market stakeholders, speaking this week on Bisnow's Reopening the Nation's Workplaces webinar, said they are now focusing less on preparing their properties for people and more on helping their employees feel comfortable coming back to the office. 

WashREIT's Matt Praske, Oxford Properties' Chris Mundy and Nixon Peabody's Jeff Lesk at a 2019 Bisnow event.

Oxford Properties U.S. Head of Office Chris Mundy said his firm had initially expected buildings would reach around 25% occupancy soon after the reopening process began and then gradually increase. The reality has been much different, he said, with Oxford's U.S. office portfolio today still at less than 5% capacity. 

"The employees for a variety of reasons have been very cautious," Mundy said. "It's been much slower than we initially thought ... a big part of this is there's comfort and safety that employees have to feel to come back to the buildings."

HOK Director of Workplace Kay Sargent, who oversees a practice that designs around 55M SF of office space every year, said building owners and employers need to think more about the mental health of their workers, who may be dealing with issues such as burnout and stress that have been exacerbated during the pandemic. 

"We were doing a horrible job of addressing all of that before COVID, now you add on the added layer of anxiety that COVID has brought, we can't even find the can we've kicked it so far down the road," Sargent said. "Preparing the people for the return to work is going to be far more complex than some of the real estate issues we're dealing with."

Clockwise from top left: American Real Estate Partners' Doug Fleit, Oxford Properties' Chris Mundy, HOK's Kay Sargent, Invanhoé Cambridge's Jonathan Pearce, International Well Building Institute's Rachel Gutter and Bisnow's Ethan Rothstein.

International Well Building Institute President Rachel Gutter said companies have been participating in the organization's wellness initiatives at record rates as the coronavirus has increased the focus not only on physical health, but on mental health. 

"The second wave of wellness issues are already starting to show up, which are mental health-related issues, this accrual of trauma, of people living in really strained and stressed situations, financial strains from partners who have lost work, for instance," Gutter said. "That's something we've got to keep our eye on."

Ivanhoé Cambridge Executive Vice President of Leasing and Development Jonathan Pearce, who oversees a 130M SF portfolio across North America, said the continued remote work environment is creating many human resources challenges for companies. He said it is creating mental health issues and talent management issues, with employees who feel less of a connection to their colleagues being more likely to leave. 

"The longer-term implications of talent management, of loyalty of staff, of turnover, of feeling burnt out and feeding into the mental health issues, I think those things are immeasurably linked and are much more complex than just turn the lights back on, everyone goes back to work and pretend that nothing happened," Pearce said. 

The office building at 85 Broad St. in New York, owned by Ivanhoé Cambridge.

Creating a safe environment as companies bring employees back to the office is proving challenging, Gutter said, because building safety measures that landlords implement can only go so far. The most important safety measures are the ways in which employees behave.

"The building is only as safe as the way people inside are interacting with one another and with the building itself," Gutter said. "Organizations need to be thinking about what are we doing to re-onboard occupants as they're coming back into these buildings. At this point, we're relying on everbody's good behavior."

American Real Estate Partners CEO Doug Fleit, whose firm has about $2B in assets under management, said workers have started to return to its office buildings, and they are currently operating between 10% and 25% capacity.  

"We're trying to find that balance and workplace that makes people feel comfortable and confident and safer to come back," Fleit said. "We can't create a totally safe work environment, because someone next to you may have the virus and they're asymptomatic. But we can make the buildings safer and healthier."

Fleit said building owners need to focus on how to train occupants to safely use shared facilities like fitness centers and cafeterias. 

"We need to figure out how we're going to come back to the office and have collaborative spaces, use the fitness, figure out how we're going to be fed in the office," Fleit said. "All the things we've worked the last 20 years to develop to the level that we have, we shouldn't lose over the next five years. We need to come up with better solutions than 6 feet apart and plexiglass cubicles. That's not the right solution."