Last week I addressed the question:
What’s the office for? This week I want to turn to the PwC survey I cited last week to look at another fundamental question as we emerge out of the pandemic: Where is the office (or where should it be)?
PwC surveyed 133 U.S. company executives last November and December, and one area of focus was these executives’ plans for their future real estate strategy. The bottom line is that the vast majority — 87% — are planning to make changes to their real estate strategy by the end of this year. What might those changes look like?
- Consolidate office space in at least one premier business district location: 61%
- Open more locations, such as satellite offices in suburbs: 58%
- Consolidate office space, but outside of major cities: 51%
The share of respondents who expect to reduce their overall amount of office space stayed essentially flat from PwC’s June 2020 survey, at 31% in the most recent report. There was some shift among those who expected to increase office space (down from 56% in June to 51% in the latest survey), with a corresponding increase in those expecting to keep office space the same (up to 19% from 14% in June). The expected increase will be driven by a combination of natural growth in the workforce and the need to provide more space to accommodate pandemic-driven distancing requirements, PwC reported.
The finding that major cities still seem to be the preferred choice for offices in the future may mitigate the concern that COVID would lead to a reversal of the urban boom of the past several years. However, the willingness to open satellite offices in the suburbs suggests that enterprise leaders may not be expecting their employees to live in the cities where they work, at least in the same numbers as we’d seen before the pandemic.
Overall, these findings suggest that enterprise leaders understand that they have to offer incentives for employees to come into the office (or an office, anyway). As I wrote last week, there’s a considerable mismatch between how often employers want their workers to come into the office and how often (and which days) those employees would prefer. And the most meaningful incentive, presumably, is to provide a reasonable commute time for as many employees as possible.
But the devil will be in the details. For a large enterprise that adopts the model of a hub office in the big city, supported by satellite offices in the suburbs, what will those offices look like? Will each team be based in one particular office, to which every member has to report on a set weekly schedule? Or will any employee be able to work out of any office according to their own preference and current space availability? If it’s the former, the system might wind up breaking down as people who don’t live near the team HQ finagle ways to work from home more. And if it’s the latter — i.e., you’re going into an office that may not be where most of your team reports — why is it better to go into that office than just to work from home?
People are messy, and while most take their work location into account when they look for a home, then they change jobs. Or their partner changes jobs, and they have to move. Enterprises will work their way through to a new real estate strategy, but getting that strategy right is going to be challenging for some time to come. If you do come up with a new real estate strategy by year-end, hopefully it’s built with a lot of flexibility.
