People Have Buried the Office, But It's Not Dead - 7investing 7investing
Stock Tips Mobile Menu Dropdown Icon

People Have Buried the Office, But It’s Not Dead

The pandemic caused most companies to close their offices, but that change may not be permanent.

April 6, 2021

– Advisor: Daniel Kline

Industries: Real Estate  

In the early days of the pandemic many companies learned that they could operate efficiently with their workers telecommuting. It took a few weeks for some businesses to bring the needed systems online, teach people how to use Zoom (or similar software), and create other operating procedures. But, for the most part, the transition to a work-from-home model showed that offices were maybe not as necessary as we once thought.

This initial success led to countless stories about the death of the office and workers moving away from cities. That happened — because why would you spend lockdown in a tiny Manhattan, San Francisco, or Seattle apartment when you can move to spacious digs in Texas, the Carolinas,  Florida, or someplace else warm?

Now, however, more than a year into the pandemic with the end seeming possible, if not quite in sight, both workers and companies have rethought their long-term views on offices. That’s not a simple answer and the post-pandemic world clearly won’t bring a full return to the office, but it’s also premature to say that the office is dead.

We now know the value of being together

Some companies will cut some or all office space as a cost-saving measure. That won’t be the norm. Instead, many companies — led by tech leaders including Alphabet (Google), Facebook, Netflix, and Apple — will bring people back to their offices but on a more flexible basis. In addition, while some companies are allowing full-time remote work, many are expecting workers to live a commutable distance from the office.

It’s also worth noting that some employees are eager to get back to the office at least part of the time. Both companies and workers have recognized that there are positives to having people work together in an office. Some of those benefits are tangible while others are more about socialization and connection.

The work world of the future won’t look like the work world of the past, but, in most cases, it also won’t look like the past year. Companies, even ones that expect employees back in the office, will be more flexible. That could meaning allowing some employees to work remotely if their jobs lend themselves to that, while other will be much more flexible with allowing some work from home.

It’s a hybrid future

The pandemic showed companies that people can work from home effectively. It has also showed that doing so can lead to burnout and feeling disconnected. Not having to commute or getting to live where you want has its benefits, but the drawbacks became clear as well.

That suggests that the future involves more flexibility. Even rigid companies that expect workers to come to an office won’t want someone coming in with a cold and most will be flexible when someone has a sick child, a doctor’s appointment, or some other logical reason to work from home.

Many companies — perhaps even the majority — will allow workers to spend some part of their work week at home. That will look different on a company-by-company basis.

This changing world may have some impact on office leases as companies may decide they need less space going forward. Fewer people going to the office everyday may have a small ripple effect on companies like Starbucks and other chains that serve office workers. The reality, however, is that people who work from home still buy coffee and may get lunch out. Shifting demand may cause some companies to tweak locations or shift capacity to delivery or pickup, but “working from home,” may mean working from a coffee shop in a post-pandemic world.

There will be small changes caused by a shift to more people not going into the office everyday. Some will be positive — like less traffic and fewer emissions harming air quality — while others will be harder to quantify. What’s the value of not having to leave a sick child at home or take a day off to care him or her? Is being able to end your Friday and then immediately start your weekend with no commute a major perk? For some it will be, others won’t care as much.

The new world of work for what would have formerly been called “office workers,” will be flexible. That’s always how it should have been and the pandemic convinced companies that it could be done productively. This won’t be a massive shift. Instead, it will be a subtle change that benefits both companies and employees.