Republished with permission from Commercial Property Executive.
Rather than tackle a reconfiguration challenge, many companies have adopted a delay mentality, a recent SIOR report finds.
Since the onset of the pandemic, there has been much discussion about the future of the office sector, especially how much space companies will occupy and what the post-pandemic office layout will look like. However, as we approach the two-year mark since the start of the crisis, only one thing seems to be certain: there is still no clear answer as to the true long-term impact COVID will have on the office market.
Case in point, is the recent Society of Industrial and Office Realtors’ (SIOR) Q3 2021 Snapshot Sentiment Report which surveyed a wide collection of SIOR office specialists. According to their expert insight, any change to office design, layout or rehabilitation varies greatly depending on everything from the culture and size of the company occupying the space, to the region of the country, and the overall size of the market. Again, uncertainty rules the day.
During the pandemic, many companies decided to transition to a remote work strategy. Call centers, usually packed with employees, shifted to having employees work from home. But did the pandemic accelerate what would have become the norm for these call centers anyway? Due to technological advances and the need to provide a perk to attract employees, the answer is probably yes.
But for more traditional offices, there was plenty of speculation as to how the office of tomorrow would be designed and configured. But what is clear now, is that very few office-using companies are physically redesigning anything while the pandemic is still with us.
The results continue to cause confusion because no widespread design changes, trends or alternatives have emerged. As companies allow employees to work from home, SIOR broker members report that these businesses are attempting to sublease their space to see how the future plays out. Other companies allowing a hybrid model for employees to work remotely part of the time must maintain at least some office space for their team. But these offices tend to have the space laid out at the same scale, exactly as they did pre-pandemic.
Rather than tackle a reconfiguration challenge, many companies seem to be fine with a “kick the can down the road” philosophy or opting for short-term lease renewals rather than making the critical decisions of what to do with their space. One very real and unavoidable factor influencing the delay mentality is the steep rise in construction and material costs. As such, the safe decision of doing very little has taken hold.
We must wait and see if 2022 is indeed the breakout year we have been hoping for and corporate America begins to take proactive steps to address their office occupancy issues. Or this protracted period of indecision could linger, as companies place higher priorities on other corporate issues like hiring.
Unfortunately, the only thing that can be done for sure right now, is to wait and see.