The Shrinking Office

With the demands for a physical office fast decreasing,organizations need to identify new ways to manage and motivate staff in future work structures

The office is shrinking. In major cities across the world office spaces are increasingly going empty. This is going to be a permanent trend as organizations raise the critical question; do they need large offices that they had in the pre-Covid era? There are two reasons behind this – employees are reluctant to come back to office for more than two or three days a week, and the investments of creating a remote work environment is paying rich dividends for companies.

A recently released survey by JLL, a real estate professional services and investment firm, of the Indian office space market showed that in Q1 2021, occupiers adopted a cautious approach and focused on reassessing their real estate portfolios and long-term commitments. Moreover, a spike in COVID-19 cases in the second half of March pushed the occupiers to press ‘pause’ again. Consequently, market activity in Q1 2021 remained subdued with net absorption decreasing by 33% when compared to Q4 2020.

Data from Google shows that workplace activity in London, New York, and San Francisco is running at half what it was before the pandemic. In New York City, for example, office vacancy rates have risen 11.3% in the last year, and now stand at the highest level in 27 years. Organizations that wanted people back to office have faced serious pushbacks from their staff, who have argued that there has been no loss of productivity or even innovation during work from home, despite no physical supervision or the much-talked-about water-cooler moments creating that spark.

Image 1: Office occupation – Indian scenario

In India majority of office space leasing activity happened as eCommerce picked up and ITES continued to function almost in a business-as-usual fashion relatively untouched by the pandemic disruption. The IT/ITES occupiers continued to account for a majority of the office leasing activity in 2020. At the same time, the year witnessed increased traction from sectors such as e-commerce, manufacturing, and healthcare. In Q1 2021, the dominance of IT/ITES occupiers continued while sectors such as manufacturing and healthcare witnessed healthy activity.

Two reasons for having offices — supervision and informal interaction — have always been apparent. However, for many companies, the degree to which they matter has changed after a year of working remotely. there is an argument that many people’s remote management skills are a lot better at this than they were before the pandemic.

Being physically close to your clients and collaborators becomes less important when more people work remotely, so the benefit of having an office in a central business district are showing signs of decreasing. At the same time, being close to amenities may matter more. If you’re traveling to the office mostly to socialize with colleagues, rather than do heads-down work at a desk, being near restaurants and parks becomes more important.

It also throws up innovative concepts like the hub-n-club model. While the Hub provides collaboration areas, ad-hoc meeting spaces, focus zone, touch and go space, townhall space, work café, enclosed meeting rooms, concentration/silent zone stations, live zone stations, the Club is about attention to design detail, sense-of-belonging front-of-the-house visual impact, functional and diverse furniture, ambience sound and music, visual communication, diverse and healthy F&B offering.

The pandemic has reinforced what we already know: work is about so much more than just getting things done. Empowering people to thrive in a more flexible work world requires rethinking the entire employee experience – from safety, to how you create culture, to attracting and retaining talent. The benefits of managing by outcomes has been recognized for some time, yet many organizations have stuck with the easier option of management by attendance, fostering a culture of “presenteeism.” This will require a mindset and cultural shift in management thinking. While the health impacts of the pandemic still have some time to run, organizations need to be proactive in identifying future work structures and how they will manage and motivate staff, both good and bad, as the one prediction one can make with certainty is that the old way of working will not be coming back.