Article

Are the days of showing up at work with a cold over?

2021 will bring a transformation of office real estate

January 14, 2021

Some of the worst parts of working could soon be history.

Before the pandemic, a typical commute was 90-minutes, people sometimes came to work coughing, and many kids spent nine hours a day at daycare.

But as vaccines are distributed to essential workers in locations across the globe and expected to reach the general population in the not-so-distant future, the workplace that many will return to will be different.

New mobility programs could drastically shorten the commute. A hybrid work model that includes more time at home could reshape how parents spend time with their children. Changing office layouts with a renewed focus on health could mean fewer concerns about that sneezing colleague.

“The world has changed and accelerated in a way that will alter the course of our future and there is no going back,” says Christian Beaudoin, Managing Director, Research & Strategy, JLL, and co-author of the report Better Than Normal. “But it isn’t all bad news. Many situations considered normal in early 2020 were actually far from ideal. We now have the opportunity to make things better than they were before.”

Hybrid work

The pandemic has given employees a taste of remote working, and they're not ready to give it up entirely. In a recent JLL survey, 70% of respondents favored a hybrid model of working, where they have the option to work remotely and go to an office to collaborate with colleagues. The majority of respondents—74%—were attracted to the idea of a 4-day work week. Working parents, in particular, are in favor of the hybrid working model.

“This pandemic has been hard on working parents, but they were strapped before the virus,” Beaudoin says. “The option to reduce commuting through hybrid work arrangements is incredibly appealing to parents.”

Balancing work schedules with children's appointments, sports activities, daycare schedules and a lengthy daily commute is not just a significant source of stress: it often prevents parents from doing their best work, Beaudoin says. Round-trip commutes to offices in San Francisco and Chicago could easily take-up three hours per day from the suburbs—but the pandemic has shown employers that these may not be necessary every day.

“The hybrid workplace model allows employees to reduce some of their time spent commuting and instead put their focus on higher-value work,” Beaudoin says.

Blurred lines between city and suburbs

New mobility programs have also given employees a chance to re-think where they live. Those who are looking for more space and a lower cost of living now have the opportunity to move to the suburbs and work from home a few days a week — so they’re taking it. Since March of 2020, the growth rate of suburban home values has doubled in areas near Seattle, San Diego and Boston, and more than tripled in Austin and St. Louis.

“The historical contrast between urban and suburban neighborhoods is becoming blurred as people intersperse throughout the larger metro area,” says Phil Ryan, Director, U.S. Office Research, JLL.

Cities like Dallas and Los Angeles are already showing signs of a distributed center. Their urban downtown cores are being dispersed to secondary and tertiary neighborhoods and suburbs, which in Los Angeles are forming around Santa Monica and Wilshire boulevards. Los Angeles is also planning an aggressive push to connect the suburbs by public transit to ease congestion and reduce socioeconomic inequalities.

“Dense urban cores will remain the lifeblood of the city, and urbanization is not over, but growth will be more distributed,” Beaudoin says.

A distributed office footprint and layout

To account for a more dispersed workforce, companies need different types of offices to allow for more customizable and fluid space planning, as well as spatial strategy, which has become important in the age of six-feet distance. Office footprints can be distributed across several smaller boutique spaces that are closer to where employees live. Many companies are still looking at having a primary office, but one supplemented by greater access to flexible operators for employees without a need for a permanent desk, Beaudoin says. Deloitte, Bank of Montreal and KPMG are three of the latest companies exploring a distributed workplace office model.

It's not just the office location that's changing: the layout will look different too. Bench seating and open office layouts have risen in popularity over the past decade to maximize the use of space—but those days could be over, at least in the short-term. The idea of employees coughing or sneezing next to each other is no longer just a woe of winter (or scourge of summer allergies): it’s no longer acceptable. The distributed office model helps decrease employee density and support health and wellness in the workplace.

Shorter lease terms

For companies, changes to their real estate portfolios may feel daunting. Before the pandemic, new leases could require a 10-year commitment and significant upfront capital, but that has started to change. Lease terms are getting shorter. The average lease term in the U.S. in 2020 was 6.7 years for spaces less than 20,000 square feet, down from 8.4 years in 2019. Shorter lease terms allow companies to create more flexible portfolios and become more agile to accommodate new ways of working.

“In 2021, companies have an opportunity to build back better,” Beaudoin says. “Employers that can accommodate the shifting employee demands, prioritize health and wellness, and prepare for a better normal will build a stronger foundation for success and will continue to attract and retain top talent.”