CRE Opinion

De-Densification is the Future of The Workplace

Hybrid work schedules that combine remote and on-site workspaces are here to stay, says Butler Advisers founder Diane Butler.

The death of the office, to paraphrase Mark Twain, has been greatly exaggerated. Nevertheless, the crowded office as we know it may be gone. The COVID-19 pandemic most likely will change the way companies use office space, boost technological advancements, and fast-track workplace health and safety.

Diane Butler

Many presumed early on that more people working from home would result in less demand for corporate offices. However, global alternative asset manager Brookfield reports that its commercial properties in Seoul are approximately 90 percent occupied compared with pre-COVID levels. It seems that life in South Korea is returning to a semblance of normalcy.

Research by CBRE found that demand remains strong for bricks and mortar. In fact, 41 percent of the 126 senior real estate executives surveyed said the physical office’s importance will decrease only slightly, and 38 percent said it will remain as important, if not more. CBRE reported that 70 percent of those surveyed responded that some portion of the workforce will work remotely full-time, while 61 percent signaled that employees will be allowed to work outside the office at least part-time.

It will not be a question of working in the office or from home in the future. Hybrid work schedules that combine remote and on-site workspaces are here to stay.

A Stanford University study of 2,500 employed U.S. residents that asked how often they would like to work from home post-COVID-19 showed wide variation, with almost 60 percent preferring some mix of on-site and remote work. Employees’ longing for choice will quicken workplace evolution. Post-COVID, working from home will be a supplement to the office rather than a substitute.

The benefits of people working from home are plentiful. These include increased productivity, less commute stress, positive environmental impact, and money savings. Even so, our lives are based on relationships.

One does not have to look far to see that an organization’s culture requires mutual trust and cooperation and that physical proximity is critical to respectful and positive relationships. Many still crave the benefits of innovation, socialization, collaboration, and face-to-face interaction with colleagues. And there always will be FOMO or the fear of missing out.

De-densification is the future of the workplace. With health and well-being at the top of mind for employers, the trend of office compression (from 225 square feet per employee in 2010 to 150 square feet per employee in 2020) will reverse. As a direct effect of social distancing and the desire of many to return to an office, this turnaround to a projected 200 square feet per employee by 2025 will result in businesses taking the same amount, or possibly more, office space as pre-COVID.

Likewise, the workforce will expect buildings to be cleaned more thoroughly in the future. The importance of design and construction will increase with outdoor gathering areas and contactless elevators, doors, and appliances. The focus will intensify on ventilation, sustainable spaces, and LEED and WELL building standards.

Despite the adversities of the dot-com bubble, 9/11 terrorist attacks, the global financial crisis, the Brexit referendum, other global shocks, and now the COVID-19 pandemic, people always remain resilient. As the coronavirus vaccine delivery ramps up, we are optimistically on the brink of returning to many pre-pandemic routines.

The pandemic may not be as much of a paradigm shift as it is a reminder always to expect the unexpected. And that is a valuable lesson. With some luck and thoughtful planning, our post-pandemic workforce can be more productive and enjoy their lives a lot more.

Commercial real estate entrepreneur Diane Butler is president of Dallas-based Butler Advisers.

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