By Kruti Desai, National Research Insights Manager | June 19, 2020

Office design has evolved throughout the years, at once being shaped by the way we work, and informing the way work is done.  Advancements in communication and office technology has allowed for increased mobility, flexibility and collaboration, and continues to define what’s possible. The most palpable example of this is the one we are experiencing now, in the face of the COVID-19 pandemic, in which the adoption of digital technology has been significantly accelerated in order to make working from home and in other spaces outside of the traditional office possible.

Thus, we have been hit with a new realization – do we really still need office space?

Yes and no – the office isn’t going away any time soon, but it will need to evolve quickly to meet the changing needs of companies and their employees, if we want it to exist at all.

 

Shrinking, but not forgotten

More than ever, workplace collaboration tools and video conferencing platforms are being used to stay connected in the virtual workplace.  In light of recent events, many companies are reevaluating what is possible, what is no longer needed, and how many dollars would be saved if they were to implement these changes on a more permanent basis. Work-from-home arrangements, fewer in-person meetings, and increased technology support has meant that companies can reduce their costs, but still maintain worker productivity.

Some of these changes and sentiments are already being reflected in the market.  For example, OpenText recently announced plans to downsize their offices by up to 50% globally, while Shopify is transitioning its employees to work remotely on a permanent basis.  Looking at early Q1 2020 data for the Greater Toronto Area – the largest office market in the country at about 190 million square feet of space – shows that leasing activity has declined by over 50%, sitting at 2.5 million square feet, down from 4.3 million square feet just a year earlier.  Part of this was due to the pause in the market and the emergency pandemic restrictions that were put in place.  Nonetheless, available sublet space in the downtown Toronto area has increased to 300,000 square feet, from 20% in Q4 2019 to 26% in mid-June 2020.

Downtown Toronto office sublet activity

Yet, shrinking your office space, or eliminating it altogether, can come at an unexpected cost.

The modern office has seen a shift towards increased portability and smaller, more efficient, more open workspaces. The national average square foot per employee for office space has fallen to between 70-135 square feet in the last 5 years from 85-165 square feet, at an average annual rate of 5%, depending on company or industry type. However, this space compression has also meant increased noise, increased stimuli, and negative impacts to productivity.

And, for those who are considering eliminating their office space completely, it is important to consider what these work-from-home realities are missing.  The “water cooler conversation”, accidental meetings or chance collisions, opportunities for face-to-face collaboration and the in-person exchange of ideas – all of these things are crucial elements for building company brand and culture that a physical office space can help harbour.

Moreover, having the ability to work from home doesn’t necessarily make it feasible or ideal for everyone.  Certain types of occupations, albeit more traditional ones, still require employees to be physically present, and some businesses have larger space requirements than others, such as storage for things like equipment, paperwork or physical records.  As long as these jobs exist, there will be a continued need for functional space outside of the home in which people can work and businesses can operate.

 

Rethinking office space

Given the precarious course of the pandemic and the uncertainties around the timing of a vaccine, it will take time – a lot of time – for companies to devise a strategy that works and makes sense in the long run.  Even for those who have already made the decision to change their office space requirements or to relocate, it will take time to search for suitable locations, implement new office designs and devise office safety and sanitation protocols.

Employee health, wellness, and efficiency will remain top of mind.  This will include everything from enhanced sanitation requirements, to effective HVAC systems for circulating fresh air, to physical distancing measures and elevator logistics, especially in buildings that are 20-storeys or higher.  All of these are considerations that will need to be factored into future decisions around changes to the office.  Employees will need to feel safe, and are unlikely to return to the office unless they do.

For the time being, the answer to the question of whether there will be or won’t be offices in the future will depend on whether we will be able to provide a healthy workplace, one good enough to satisfy employee needs for safety, comfort, and collaboration.  The office is here to stay, as long as we can make it safe, efficient, and attractive enough for people to want to be there.  The key will be to design and implement with flexibility, keeping employee health and safety at the forefront of all decisions.

 

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