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Office space, that long time “darling” sector of commercial real estate, has taken on an unusual glumness these past few years, as landlords and businesses struggle with emptying or woefully underutilized space. While demand for office space hasn’t dropped significantly (particularly in Atlanta), tenants are downsizing their offices (making do with less) as they increasingly adopt shared offices and technology to support employees’ ability to work remotely.

The reasons for such winnowing are both economic and cultural. Globalization, outsourcing, generational differences and preferences have all played a part in transforming once bustling workplaces into virtual “warehouses” of hardly used (or desired) cabinets and cubicles. The biggest culprit, of course, are mobile devices, and their impact on business, lifestyles, and how we communicate (or don’t) in today’s “smart-phony” world.

Four major trends are impacting the office market:

1. Move to more standardized work space. Private offices, once important status symbols, are deemed anachronistic in today’s progressive work environments.
2. Non-dedicated office space. Workers take whatever space is open when they do show up. There’s seldom a crowd coming at the same time.
3. Growing acceptance of telecommuting and working remotely.
4. More collaborative work spaces and functional project teams.

 

Once upon a time, every worker had their own assigned office or desk, but with actual utilization of only 50%. Firms that share space are seeing much higher utilization rates of 80% to 95%. Globally, the average space per office worker has lowered to 150 square feet or less, from 225 square feet in 2010. The new space takes advantage of natural light, promotes face-to-face contact, and utilizes wireless technology and mobile devices to allow for a more flexible work environment.

More employees work from their homes than ever before; often prodded by their employers to work there, versus trudging through murderous traffic. The number of remote workers increased 115% in a decade, according to a new report from Global Workplace Analytics and FlexJobs. That translates to 3.9 million workers, or almost 3% of the total U.S. workforce, working from home at least half the time in 2015, an increase from 1.8 million in 2005.

 

The reasons for the shift from office to “den” based work environments have been studied ad nauseum, with both employers and employees touting the benefits of improved efficiency, profits, and job retention. Among such findings:

• Fewer distractions and less time commuting allow workers to do as much or better in less time.

 

• Remote workers say they’re more engaged with co-workers and managers than in-office staffers. The glut of technological tools to help workers stay connected makes the difference, including vastly improved video conferencing.

 

• 80% of home-bound workers reported higher morale with less stress, while 69% reported reduced absenteeism. Offering remote work options reduced employee turnover by over 50% according to a study published by Stanford University.

 

• Companies of all sizes report significant decreases in overall operating costs, notably lower rent as companies downsize current space, or relocate elsewhere upon lease renewal.

 

• Working remotely meets demands of younger workers, who see the broader marketplace as their “office” – greatly increasing their interest in working for specific employers.

 

• Ironically, working from home also keeps older workers in the workforce longer.

Such findings, however, do not inevitably point to the extinction of every downtown skyscraper or suburban office park. There’s another change in business culture as well – one that bodes well for bringing workers back “home,” namely the desire (need) for greater collaboration – management, units, teams, departments working together to innovate, problem solve, and foster a compelling, positive company culture.  Teams that complement and respect each other are more productive and enduring. Such interaction spurs on creativity, “bottom up” buy-in and results.

For all its on-paper efficiencies, telecommuting does not work as well in economic downturns or highly stressed work environments. In such situations, business owners quickly become micro-managers; compelled to oversee, meet, and measure productivity “live” and in-person. Workers sensing their job is under scrutiny tend to show up more often. The open floor plan makes such interaction easier… to see and be seen.

The addition of more on-site amenities and recreational space for office employees has also helped offset the impact (and isolation) of telecommuting. Breakrooms have morphed into game rooms, massage and stress-reduction rooms, nap rooms, etc. in many progressive work places (particularly among tech companies), who abandoned the cubicle and corner office long ago, in favor of freeform sitting arrangements. Communal meeting rooms are used for meetings, private calls, or group projects.

With the recent economic upsurge, and prospect of national tax reform, companies will likely add employees to their roster, and some (not necessarily proportional) added office space.  BUT, while space size needs may be “flat,” tenants will be asking for more in amenities, whether it’s within their usable space, or public areas within and around the building. Existing office space can be reconfigured more efficiently with better natural light, more energy efficiency, healthier ventilation and more sound control. Better designs can minimize interruptions and provide flexible work space. Office facilities providing more of these “satisfiers” will remain highly desired and competitive.