Over the past decade, amenities in and around office buildings had grown in quantity, popularity and creativity. The proliferation of office amenities was the outcome of several trends coalescing into a perfect storm of office real estate transformation: stiff competition for in-demand talent, supply-demand mismatch in employment, demographic shifts, higher-than-ever expectations from users, technological advances changing how and where work can be done, and a wealth of new, high-quality office development. As work can be done more easily from anywhere, landlords and occupiers were creating desirable and inspiring spaces where employees actually “wanted” to work.
And overall, this strategy had paid off for both investors and occupiers:
Investors: A 2019 Cushman & Wakefield study of 250+ office buildings in North America showed that pre-COVID-19 highly-amenitized buildings had an 18.3 percent rent premium compared to the surrounding submarket prior to the onset of COVID-19. The premium was even more substantial in the central business districts (CBD) of gateway markets (+21.6 percent).
Highly amenitized buildings outperform (Pre-COVID-19 Q3 2019)
Occupiers: Leading into the current recession, the biggest concern among CEOs—regardless of sector or geography—had been attracting and retaining talent. The workplace had become an extension of corporate culture, offering one of the first impressions for potential new hires and driving connection to the corporate brand and culture for existing employees. (One of the most problematic impacts of the COVID-19-induced work from home (WFH) has been that half of employees have struggled to connect with their company culture.)
the initial challenge for employers and landlords has been how to create environments that attract workers back into the office
COVID-19’s impact on amenities—in the short term
In the face of COVID-19, the initial challenge for employers and landlords has been how to create environments that attract workers back into the office while ensuring the proper health and safety measures are being taken. This is not only true for the workplace, but is also a concern for the office lobby, spaces in and around the office building, and the commute itself.
Much of the return to the office timeline revolves around the types of amenities designed to make life safer and more manageable while COVID-19 continues to be a concern. However, they don’t necessarily speak to what a post-COVID-19 world will look like for office amenities. In fact, these short- term solutions are often just ‘table stakes’ for getting workers back into the office space.
- Expanded personal space around workstations4
- Enhanced cleaning protocols5
- Improved indoor environmental quality (IEQ)6
- Covering out-of-pocket transportation costs
Examples of on-site office service amenities
What changes in the long-term?
For good reason, the majority of thought leadership over the past six months has been focused on managing distributed teams through a global pandemic and subsequently how to reenter the workplace safely and effectively. However, now is the time to understand what the future of work will look like once the worst of the pandemic is behind us.
First, the office’s demise is greatly exaggerated right now. Certainly, WFH and remote work will continue to be a larger part of economies around the globe. Even prior to the current recession, global office space utilization was approximately 60 percent on any given day.8 Post- COVID-19, we will see a growth in firms offering formal WFH policies. A recent Mercer employer survey found that 83 percent of companies plan to allow more people to WFH on the other side of the pandemic.
This will inevitably impact the office real estate market. In fact, current estimates peg the impact of working from home on office demand between 3-17 percent over the next decade. The drag on aggregate demand is expected to be lower across Asia Pacific (five percent or less) and higher across Europe and North America (15-17 percent). However, countless CEOs have stated that even if workers are in the office less than they were pre-COVID-19, the benefits of working together face-to-face remain critical for innovation, work quality, productivity, relationship building, culture and professional development. With 70 percent of workers indicating they would like to work in the office most of their week once COVID-19 is no longer an issue (and only 12 percent desiring 100 percent virtual work), the office will continue to directly impact the majority of employees on any given day.
Second, what the office offers workers will be more important in a post-COVID-19 world, not less important. The current crisis has confirmed that certain types of work are equally possible inside or outside of the office. As a result, the office space and its amenities will need to be retooled to support the functions that happen best in the confines of the office. Differentiation through amenities will be more vital for landlords and occupiers seeking to create vibrant spaces for employees who now have more options for where and how to work.
Given that many people are generally productive at home, the primary purpose of the office moving forward will be to support collaboration, reinforce culture, train and develop team members, and drive social interaction. The office—its workspaces, amenities and services—will need to be redesigned to support these efforts more directly. Many of the pre-COVID-19 trends in amenities and services will continue, accelerate or shift when workers return to the office.
Amenities before & after COVID-19
Wellness is mainstream
Providing access to the outdoors and having abundant natural light increases satisfaction and productivity which is ultimately what occupiers care about. The future of wellness is going to lean heavily on technology throughout office buildings: sensors, temperature control, air quality, etc.
The return to work timeline is heavily dependent upon employees’ comfort level with the safety of getting to and working in the office. Many of these adjustments may be more short-lived such as increased cleaning levels. However, others are continuations of trends that likely will proliferate even after the spread of COVID-19 is less of a concern. For example, improved ventilation / HVAC, increased access to outdoor space and natural light, indoor greenery, meditation space, nap rooms, yoga studios, etc.
Going beyond physical health
Employees’ ability to perform at their best is not just determined by physical health but is greatly impacted by mental health. It is estimated that 80 million workdays are lost each year in the United Kingdom due to mental illnesses.
The circumstances related to the pandemic, a severe economic recession, and many office employees working from home have led to negative impacts on mental health and wellbeing.14 While economic, health and social conditions will likely improve, the focus on employees’ mental health will remain a top concern. This is an HR and management challenge, but also an opportunity for workplace design and strategy solutions. The mental health benefits of social connections are clear; this is where the office has a central role to play.
Humans want connection
Spaces that bring people together and encourage interaction are vastly superior to those that keep people isolated. Amenities that enable connection around work and relationships allow for the necessary productivity and renewal workers need each day. Property management teams are increasingly including “community management” as part of their job description in order to facilitate social events and build camaraderie across companies.
- The greatest challenges with the forced WFH experience have been the impact on personal interactions, both formal and informal. The post-COVID-19 office will have a greater emphasis on spaces that serve these needs.
- Social: Opportunities to run into, sit with or have fun with colleagues, as well as meet new people, building strong social connections, deepening trust and providing personal meaning. As landlords provide these, it will be with the intention of building shared communities where tenants co-locate with other similar tenants.
- Learning: Spaces and programs that support onboarding, ongoing learning and development and in-person mentorship.
- Ambassadors: Occupiers also foster human connection, reinforce corporate culture and support employee productivity through “community managers” with skills historically found in hospitality and retail settings.
Convenience: making employees’ lives easier
Office has taken a page from the hospitality sector as an increasing number of offices and employers offer concierge-type services to workers. For companies, the service amenities most in demand revolve around providing hospitality services to their employees and to guests or clients. For individuals working in an office environment, the desired amenities suite has to do with the integration of their work and their life. The workplace can be a source of relief by offering service amenities that ease workers’ daily routines.
The workplace is no longer just a place to get work done. In fact, a lot of focus work can get done as well—if not better—in other locations. The office then is a place to make employees’ work better and lives easier. Service amenities can save workers with personal, concierge, wellness, community development and work-life integration services. Employees have been bringing work home with them; moving forward, the workplace will need to be designed to support employees’ lives.
Access matters
Getting to and from work is a vital consideration in both city and suburban locations regardless of market size. Locations that have multiple options offer ease and versatility. (No matter how
much we might wish otherwise, parking remains a primary concern for accessing office buildings.)
- In the short-term, health concerns related to public transportation will require creativity, particularly in higher density cities. COVID-19 has created new challenges related to public transportation. Landlords and employers have an opportunity to consider how to support the safe transition of workers from home to the office as some large San Francisco Bay Area tech firms have been doing to connect their Silicon Valley campuses.
- Long-term, locations with better connectivity and a multitude of commute options—public transportation, vehicle access, bikeable, near greenways—will provide ease to employees and create value for landlords.
Being important is important
People and companies like to feel valued. The democratization of office space has led to smaller and fewer offices, so status is recognized more broadly through high-quality views, dedicated spaces and elevators, and access to tailored services and technology. Spaces that communicate status to organizations through such amenities provide value beyond the physical space.
- WFH has its perks, but the office is uniquely positioned to provide environments that feel “special” and communicate culture, brand and values to employees and to clients.
- Access to dedicated “third places” can also be an exclusive amenity outside the office. This could be via coworking, satellite locations or, in warm weather, “outdoor offices,” that provide the social and mental health benefits of the outdoors while supporting work through Wi-Fi, mobile conference rooms and food truck meals.
Flexibility remains king
Flexible office / coworking was on a meteoric rise prior to the current recession because it offered occupiers with the flexibility to ramp up and down their portfolios quickly.15 Companies need to be nimbler than ever, and space-as-a-service allows for a greater range of space types and service amenities without tenants having to “overbuy” office space.
- Value matters. While companies are generally looking to shrink their portfolio square footage and reduce their real estate spend, the value of that space will increase. Amenities that give occupiers flexibility, reduce employees’ wasted time and increase engagement, create more value for tenants.
- Tenant-only access to flexible office / coworking, on-demand conference space and/or event space is a valuable service that allows occupiers to be more efficient and flexible with their office space.
- This is not just a building-by-building solution as occupiers can utilize enterprise arrangements that provide dedicated flexible space across multiple markets to support dispersed teams and/or to quickly enter new markets.
DESPINA KATSIKAKIS
Global Head of Total Workplace, CUSHMAN & WAKEFIELD
DAVID C. SMITH
Global Head of Occupier Insights, CUSHMAN & WAKEFIELD
SUZANNE MEHTA
Chief Experience Officer, Global Occupier Services, CUSHMAN & WAKEFIELD
RACHEL CASANOVA
Senior Managing Director, Workplace Innovation, CUSHMAN & WAKEFIELD
This article was republished with explicit permission from Cushman & Wakefield. The original article appeared in the company’s The Edge Magazine (volume 5).
