Employees Don’t Want an Office That’s Like ‘Rush Hour’

The question that people have stopped asking Albert DePlazaola, Global Director, Strategy, Unispace, is “Do we adopt a hybrid work model?” Instead, he tells GlobeSt.com, it’s become, “How do we optimize a hybrid work office model?”

Discussions around “How much space do we need?” are no longer determined by a formula of headcount multiplied by average square footage per person, DePlazaola said.

“It’s no longer just a math problem. It’s a strategic dialogue across multiple teams,” he said.

He said, at its core, it is a multidisciplinary design question that involves people and culture, real estate/workplace, employees, and team leads.

For example, one question he is often asked: “How can I balance occupancy rates throughout the week? I record peak occupancy Tuesday through Thursdays, yet the office on Mondays and Fridays is empty.”

DePlazaola said most pre-COVID workspaces were planned to use 5-day average occupancy numbers to determine how much was needed, never intending that a disproportionate number of employees would only come in Tuesday through Thursday,

As a result, DePlazaola said when employees do go in, they experience a workplace that feels like rush hour.

“They can’t find conference rooms, the café area is overcrowded, and services are strained,” he said. “If the workspace were a car engine, it would redline three days a week and remain idle for two.”

There are a few design levers to pull to help manage this, according to DePlazaola: First, design policies that encourage and incentivize team lead to coordinate alternating RTO days; Next, design thoughtful flex spaces that convert from team to individual spaces easily, with the commensurate technology; and design workplace etiquettes that also flex with demand, such as a meeting room that can transform into a library or a quiet car with a change of a protocol and some change management.”

Petra Durnin, Head of Market Analytics, Raise Commercial Real Estate, tells GlobeSt.com that despite the repeated headlines of which companies are going back to the office on what days, “return to office” is no more, and most companies are now figuring out how to manage a hybrid workforce.

“The distinct flight-to-quality trend is driven by the hybrid workplace narrative that better is better. Highly amenitized buildings and an activity-based environment can help companies supercharge engagement and productivity, Durnin said.

“The hybrid workstyle is dominating the professional landscape. Mentorship, training, meaningful interactions, and socialization are pivotal for personal growth and workplace culture, irrespective of industry or team.

“The preference for hybrid work actually hinges on project-specific needs, with some tasks thriving remotely and others demanding in-person collaboration. This compels companies to embrace an approach that accommodates both remote and in-person work, nurturing an agile work environment.”

Durnin said that office utilization has been steadily increasing as companies work to entice employees into the office more often for critical in-person collaboration and culture growth.

“Mandates alone will not increase occupancy in a meaningful way, however. The office has to offer more to the employee than ever and have a unique draw to enhance the employee experience. Data will also play a major role in helping companies assess how space is utilized so that future iterations of the workspace will be even more efficient.”

Andrew Hellinger, co-founder and principal of Miami-based Urban-X Group, said that with remote and hybrid work now commonplace, employers aim to incentivize in-person attendance via vibrant workplace settings. As tenants prioritize environments that improve the quality of life for their workforce, a new asset class has emerged: the lifestyle office.

Unlike traditional Class A spaces, lifestyle office properties incorporate retail, dining, entertainment, residential, and recreational amenities into the tenant experience, embedding office spaces within dynamic live-work-play communities.”

Robert Marino, Vice President of Asset Management at Tourmaline Capital Partners, tells GlobeSt.com that the dynamic between landlords and tenants is due to hybrid schedules.

“The most successful employers at bringing their employees in more regularly are doing so through positive reinforcement as opposed to mandates,” Marino said.

“We provide those incentives through hospitality-driven amenities in F&B, health & wellness, and work-forward third spaces that allow employees to maintain the autonomy, flexibility, and comfort that they became accustomed to while working from home.

“We have seen firsthand just how impactful the incorporation of these amenities and work-forward configurations has had on employee engagement and tenant activity. We expect that they will greatly influence landlords’ future decisions on their spaces as the office market continues to stabilize.”

While most clients are looking to shrink their footprint and, in most cases, can and do by implementing hot desking and hybrid home/office work models, the need for individual spaces to take online meetings is manifesting itself in single-person ‘Zoom rooms’ are a relatively new requirement that can start to eat away at the space savings, William Mandara, CEO and Co-owner of Mancini Duffy, a national design firm, tells GlobeSt.com.

Kurt von Koch, CEO, FM:Systems, tells GlobeSt.com that the modern physical workplace should be viewed as an extension of the company culture – a workplace destination for employees to get together for collaborative work, ideation, and culture-building.

“At the same time, with real estate being the second largest cost center to labor costs, the workplace can’t just be a ‘nice to have’ space for its employees and visitors to gather, if it’s not optimized correctly.

“For smaller companies, it might be easier to determine their evolving workplace needs, but for mid-sized and larger organizations, they really need quality, accurate, reliable data to inform how to best deliver a workplace that’s optimized in terms of space, cost-producing opportunities (e.g., energy costs, real estate costs, etc.) and in a way that helps their people actually work best for those in-office days.”

Rob Gilman, Partner & Chair of Anchin’s Real Estate Services Practice, tells GlobeSt.com that companies using the two days in the office model with rotating days require half their current space.

“Many companies are still unsure how much space to take if workers are 3+ days in the office but want to take less space than they would have in the past. Most feel they can always add space, even if not on the same floor,” he said. “They prefer not to overspend.”

Gilman said companies prefer the Class A space over Class B. Rents are down and feel the amenities are an attraction to talent, even if on a hybrid model.

Grant Bollman, Senior Associate at Lee & Associates of Illinois, tells GlobeSt.com that Chicago is seeing about a 30% reduction in space with most companies enacting formal policies for 2-3 days in the office with hoteling rather than assigned cubicles and private offices.

“That asking rents have remained relatively flat year over year tells us that building owners competing for tenants are offering free rent and tenant improvement allowances instead of a rent reduction,” Bollman said.

“Keeping rents where they are will avoid a situation where a building gets devalued, and that’s essential, especially in Class A properties that don’t have recent updates to their amenity offerings. If tenants are going to make the effort to drive into the office, most are seeking, at minimum, updated and refreshed common areas.

“The co-working movement, while beginning to have a more suburban presence, does not have the justification for further expansion. We saw that demand peak during the height of COVID, and now, we’re seeing some employees opting to move back to more permanent, traditional space.”

Ross Anders, Vice President and Austin General Manager, Project Management Advisors, tells GlobeSt.com that in Austin, despite its Q3 vacancy rate of +21%, there is a clear desire to get back into the office and to collaborate.

“We’ve seen commuter traffic in our CBD and domain areas continue to increase over the past six to eight months, but still have not returned to a pre-pandemic level,” Anders said.

“Companies, particularly in tech/information and business services, are still navigating hybrid RTO approaches while also trying to lure employees back into the office by upgrading and updating amenities and adding perks.

“Beyond just snacks and drinks, more appreciation-driven amenities and benefits are becoming more and more popular, such as better parking spots, commute cost assistance, and flexible arrival/departure times to help dodge traffic.

Project Management Advisors has a client who signed a lease for 110,000 square feet over two floors and an amenity center in early 2022.

“During the middle of construction, they elected to sublease one entire floor but continue to build-out a 6,000 SF Wellness Center for its employees, which is a fully furnished spa with steam, massage, meditation, and shower rooms,” Anders said.

“The next year or so will be interesting for Austin, with total availability at 30% paired with 6.1MSF under development at over 80% available.

Companies will hopefully continue to adapt and remain creative and flexible with their workforce, helping to reverse current vacancy trends back to the office space growth we enjoyed between 2010 and 2020.”

Liz Von Goeler, Chair of External Relations Board of Directors, Principal, Interior Designer at Sasaki, tells GlobeSt.com, “Hybrid work will be with us for a long time to follow and each approach has unique benefits, which should be chosen based on how the organization functions.

“Creative groups benefit from having everyone in the office at the same time while organizations with a team-based structure benefit from having teams together. This will also be key to determining how to approach technology and how important hybrid meeting technology will be to the organization. We have all experienced that all in-person or all online meetings are the most successful and key to building community and culture.”

Louis Archambault, Real Estate Practice Vice Chair, Saul Ewing, tells GlobeSt.com, “Since the pandemic, the office has transformed from just a workspace to a hub for creativity, socializing, and interactivity, while the home has solidified its role as a workspace for productivity.

In places like South Florida, he said, we’re observing a trend of tenants opting for smaller spaces in Class A buildings — office spaces that offer a community for workers to connect. The intrinsic desire to go to an office remains intact, but the very essence of why we go has evolved.”

Kristi Smith, President of the Maryland region for Howard Hughes, tells GlobeSt.com that with the rise of a remote and hybrid office model, people continue to seek places to work where they can experience a full, balanced life, all within a short commute.

Downtown Columbia, Md., is uniquely positioned to meet those needs, Smith said, with its walkable natural landscape and countless amenities. “Regularly ranked one of the best places to live in the country, Downtown Columbia has been able to answer the call from office tenants for a better place to come to work,” she said.

Alex Dunham, Managing Director, Ark, tells GlobeSt.com that ultimately, before making any real estate decisions, “companies should consider employee preferences and get feedback through employee surveys to ensure that the real estate approach supports the needs and wants of the workplace.”