The coronavirus pandemic has turned once-bustling city centers into ghost towns with abandoned office buildings and little foot traffic. As stay-at-home orders were put into place, many companies temporarily shuttered their doors and scrambled to provide employees with the tools they needed to work from home. And now, as we adjust to this new normal, many companies are wondering if office space was as vital as they thought, with some considering eliminating offices altogether.
If you find yourself weighing the pros and cons of maintaining an office for a workforce that is now mostly remote, here are a few questions to ask yourself.
Do you rent, or own, your office space?
The biggest factor determining the future of your office space is whether or not you rent or own the property. Renters, for example, may be held to legal obligations outlined in their current lease agreement, including whether or not they can terminate the lease early.
“A tenant may have few options available if the current lease has a lengthy remaining term, there are personal guarantees in place, or the landlord is unwilling to renegotiate the terms,” said James Bond, a Phoenix, Ariz.-based attorney and director of real estate at Fennemore Craig Attorneys. Breaking a lease can be expensive, so you’ll need to do the math to determine whether or not it makes sense to keep paying rent or pay fees associated with abandoning the lease.
Owners, however, have a little more wiggle room. While renters may have an option to sublet, owners can choose to start renting out their property in order to make their unoccupied space worth keeping.
Right now, there is a need for medical offices and schools, including auxiliary locations to accommodate overflow, said Michelle Mumoli, CEO and residential and commercial real estate salesperson at The Mumoli Group at Triplemint in Jersey City, N.J. “Obviously, ADA accessibility is important for these types of uses, but schools, specifically in cities, will need to accommodate socially distant space for students returning in densely populated areas, and large vacant offices may very well be the solution.”
If you’re considering selling a property altogether, make sure to calculate its value before making a final decision. Don’t forget to consider the influx of available office space, as you may not get a competitive price. And don’t be too hasty — think critically about what the future of your business holds. If you see yourself returning to the space eventually, even if it’s a few years away, you may want to consider renting the space instead.
Does the office still meet your needs?
In the age of COVID, going back to an office space isn’t as simple as turning the key in the lock to open the door.
“When looking at office space in the pandemic, tenants must consider the health of their workers,” said Kevin McGowan, president of McGowan Corporate Real Estate Advisors in Allentown, Penn. “This includes the access points – such as one story with a separate entrance versus multi-story with a shared elevator, and also increased demand for janitorial frequency, the nature of other tenants and their visitation patterns.”
Additionally, McGowan said you’ll need to consider the floor plan. If it’s an open floor plan, you may need to reconfigure it to provide private offices or desks that can be arranged to follow social distancing guidelines.
With video technology making conference rooms less necessary, Michael Gevurtz, CEO of Bluebird Companies in Philadelphia, said that business owners may also want to rethink shared spaces.
“As there is still a need to maintain social distancing practices, employees may not feel as comfortable occupying communal spaces, such as kitchens,” he said. Gevurtz recommends finding spaces with flexible layouts so employees can safely distance “or somewhere they can work in small teams on a rotational schedule. Some businesses have opted for a one-week on, one-week off approach.”
How much does the cost of your office eat into your profits?
Before the pandemic, you probably viewed office space as an essential part of your business. But now, you really need to crunch the numbers to determine whether or not your money is being put to good use.
“When looking at office space, a tenant will need to carefully consider the rental costs — including maintenance and utilities,” Bond said. “Many tenants are finding that they can operate with much less space than they previously thought possible, which can increase profits if they can pay for less space and still operate at the same level.”
Similarly, Bond noted that many landlords are dealing with delinquent rent payments and tenants closing their doors due to the pandemic, which means more supply in the marketplace and potentially favorable terms for renters.
“Any tenant looking to rent a commercial office space should work with the landlord, and, if necessary, a lawyer, to negotiate shorter terms or ways in which the contract could be dissolved in the event of another shutdown,” he said.
Can you spend the money more wisely?
One way to determine whether the money being used on your office space is being wasted is to consider what you could do with it instead. “A tenant who moves to a smaller space will be in a position to redeploy some of this capital toward technology that can be used for many of its employees to continue working remotely,” Bond said. Also, when employees work from home, companies can save on office furnishings, equipment and utilities.
All of this money could be spent to develop other areas of the business, including expanding marketing initiatives, updating services or hiring more employees. If freeing up some room in the budget by abandoning or downsizing your office space means more potential for the business to grow, it may be worth it. However, you need to make sure the business can still run efficiently without the office space, as well as any necessary expenses you’ll need to cover the needs of a remote workforce.
How do your employees feel about returning to an office?
If you’re stuck, why not ask for your employees’ input? Some may miss the social and creative contributions of an office space, while others may enjoy working from home. Either way, they’ll have opinions, and in order to maintain a happy work environment, you need to take those opinions into account.
Send an anonymous survey that can help you get an idea of what the majority of your employees want. Remember, you can’t make 100% of the people happy 100% of the time, but if you work with them and try to come up with solutions to ease pain points, you’ll be able to maintain a happy and productive team.