Remote possibilities
Some companies are killing the office for good — and it could transform the way we live
TORONTO — Thousands of employees who have been working from home since mid-March are now facing a new possibility: they might never see the inside of their companies' offices again.
On Tuesday, Twitter Inc., became the latest to raise the possibility of a permanent shift in workplace policy when it reportedly told employees that it would keep remote-working protocols necessitated by the coronavirus pandemic in place indefinitely.
The move follows late April's decision by Waterloo, Ont., headquartered OpenText to close 50 per cent of its office locations around the world, leaving 20 per cent of its workforce without a fixed office.
OpenText chief executive Mark Barrenechea said the shift wasn't primarily about saving money, but about taking a fresh look at how his organization is shaped.
From a cost perspective, it's probably neutral, getting to maybe a slight benefit,” Barrenechea told the Financial Post in a recent interview, noting that any benefit would be reinvested in the workforce.
“It also is going to allow us to go after talent that we weren't able to go after before, because our talent has always been tied to a physical space.”
OpenText made its decision earlier than most, but experts in the world of commercial real estate say that companies all across North America are rethinking their real estate footprints, and the long-term effects could transform the way we live.
Ray Wong, vice president of data operations at Altus Group, a commercial real estate services company, said that there are a lot of different effects on commercial real estate as a result of the pandemic.
For example, on the one hand companies will need less space, because more people will be working from home. But at the same time, companies will need more space to accommodate physical distancing requirements until a COVID-19 vaccine is developed.
Wong said that there's so much uncertainty around the future of the virus, that leaders will need to plan for flexibility, as they enact temporary distancing measures to reduce risk.
“Nobody, I think, is ruling anything out, with the exception perhaps of OpenText,” Wong said.
“That's how they're going to plan their space, but I think there are a lot of other companies that are still trying to figure this out, what their needs are, and what their employees' needs are, how to keep them safe.”
Wong said it's still too early to make any firm declarations about how the pandemic will shape the physical footprint of companies over the long term. Commercial leases tend to be renegotiated months, or even years before they expire, and if a business wants to downsize its space, that takes a lot of time and planning.
Companies' office space decisions will turn on how well governments are able to do testing and contact tracing to slow the spread of the disease, and how long it takes before a vaccine is available.
The pandemic hit at a moment when office density was already at an all-time high.
“Everyone is trying to reduce their footprint, so the average square feet per employee has been dropping for the last 15 or 20 years,” Wong said. “So, the overall trend of having less space and having a smaller footprint has always been in discussion.”
The drive for greater flexibility and density was what led to the rise of co-working spaces such as WeWork, where companies could rent individual desks or small spaces in communal office environments.
That trend has led to a flood of calls recently for Breather, a company based in Montreal and New York that provides flexible, private office space.
“We're getting a lot of phone calls from companies that are looking to leave coworking for private spaces, but on flexible terms,” Breather chief executive Bryan Murphy said.
“No one wants to sign a direct lease right now, because of the uncertainty.”
Murphy echoed Wong's comments about density, saying he expects companies will need to put more space between workers. But Murphy said he also expects some companies will be able to make video conferencing and other collaboration tools work, so they aren't as tightly tied to the downtown core of a city.
The bottom line is that the pandemic has forced companies to make crisis decisions and forced a lot of executives to see that remote working was a viable choice.
Now that business leaders can see the potential to rely significantly on workers who don't come into the office every day, it forces executives to rethink a lot of other things about their operations.
“I think that the change in the technology platforms in the last four to five years has been very significant in terms of creating enabling technologies,” Murphy said. “What's been missing is sort of senior-executive buy in.”
Everyone is trying to reduce their footprint, so the average square feet per employee has been dropping for the last 15 or 20 years.