As tech companies announced plans for permanent remote work options in the wake of the pandemic, the median price of a commercial rental in San Francisco dropped 24.2% compared to 2019. Even now, many more companies have renounced their plan to bring employees back to the office full-time, so remote options have become a necessity. Hybrid work is here to stay, which reflects the importance of not just where we work, but also how and when we work. Demands for workspace flexibility come from all facets of business operations, and are impacting how commercial landlords must function as well.
The coronavirus has broken through cultural and technological barriers that previously prevented remote work, and stimulated a structural shift in where work happens. The potential for remote work depends on the combination of activities performed in each role, as well as their physical and interpersonal context. The majority of learning, knowledge-sharing tasks that involve computer use can be done remotely. However, the tasks that require creative thinking, problem-solving, and interpreting information are harder to effectively complete remotely.
During the pandemic, employers have found that although some tasks can be done remotely in a crisis, they can be much more effective in person. These include job functions like training, onboarding, off-boarding, negotiation, decision-making, problem-solving, and creative objectives. Therefore, the modern office has to accommodate collaborative use to meet the need for flexibility.
This also means that landlords have to provide greater security, meeting amenities, 24/7 access, and more frequent cleaning services to support this flexibility. For many commercial landlords, this is a substantial change to their usual scope of responsibilities, and there is friction between who will bear the costs of this shift. In order to provide a truly collaborative office space, some landlords are beginning to work with flexible office operators — third parties brought in to manage a quick and simple transition — who can also help find leads for the renewed workspace.
The potential for remote work is higher in fast-growing tech companies. Rapid technology changes have accelerated the acquisition of a distributed workforce, but companies’ growth rates are unpredictable. Unicorns today can be built within only a few years, with international service coverage to boot.
At the same time, in the wake of the COVID-19 pandemic, many fast-growing companies are facing the need to cut operations and reduce the size of their teams. For companies shifting at this scale, considering a long-term flexible office strategy can be a game-changer to support their evolving growth plan. To increase retention, landlords must provide space to accommodate the company's growth, both in and out of the primary office.
The pandemic forced companies to become more aware of how unexpected events can upend even the most standard business operations. It's no longer realistic to expect all tenant companies to sign a 5 to 10-year lease, as was previously the norm. Companies today have realized that a long-term lease creates limitations and reduces their flexibility. Unfortunately, shorter term leases have sizable implications for landlords.
More companies opting for shorter-term leases means that landlords may need to take over services that were managed by long-term tenants before the pandemic. This could lead to higher costs for landlords as they manage the need for build-outs, hospitality services, office amenities, cafes, etc.
To effectively pivot from long-term to short-term leases, landlords must focus on building trust in their lease agreements with tenants. Flexible office operators, like OnePiece Work, can provide the necessary security for both the landlord and tenants by assisting with office space management, lead generation, and space design services.
For most companies, remote work will require the reinvention of many processes and policies. Simultaneously, companies are rapidly adopting the available tools to support maximum productivity in a hybrid work environment. While the world is focusing on how companies respond to the pandemic, we can’t forget that landlords’ responses are also crucial. Looking ahead, we must ask ourselves when, and how, landlords and tenants will meet in the middle to build a foundation for the future of work.
Vickey Li is the co-founder and CEO at OnePiece Work, a global flexible workspace solution. OnePiece Work was built upon Vickey’s experience living and working abroad in major metropolitan cities like Shanghai, Hong Kong, and San Francisco. Her passion for community and extensive experience in commercial real estate led her to the vision of a cross-border co-working space that would promote entrepreneurship, innovation, and accelerate global expansion for startups. In just three years, OnePiece Work has expanded to 10 cities globally and is a community of over 350 companies worldwide.
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