As many parts of the world move toward a substantially vaccinated population, this may not be the end of the pandemic but it is very likely the beginning of the end, and I don’t know if old Winston Churchill would approve of my borrowing of his famous WW II comment, but I have noticed that the closer we get to the actual end of the covid-19 pandemic, the prognostications about what a post-covid world will look like are increasing.
While this is a very complicated question, most certainly, different sectors of life will (or will not) change to differing degrees. As a real estate agent and podcast host, I have heard many of the predictions from many different angles. My podcast, The Real World of Real Estate, has afforded me the opportunity to listen to many qualified guests give their opinions on what will or will not change. As well, as part of the business I am in, I have read or viewed many articles, blogs and videos from all manner of industry experts.
Based on all the information I have gathered over the last several months, here are my prognostications on what will or will not change in the world of commercial real estate.
I would like to start with the world of office real estate. Experts such as Benjamin Tal of CIBC, who spoke at the Realtors Association of Edmonton, and Chad Boddez of JLL Edmonton, a two-time guest of my podcast seem to think, the majority of workers will be returning to the office space.
Numerous others have pointed to the savings in commute times (the equivalent of 25-30 work days) and reduced office rents due to smaller space rented, and the increase in worker happiness that comes from working at home.
Others have commented on the rapid increase in online meeting technology making work at home a more viable option, and the possible fears of people to take crowded rapid transit where viruses can spread.
Okay, let’s start to sort through the various factors contributing to this scenario.
I think it is safe to say we will see some reduction in required office space. Another recent podcast guest, Cameron Martin of Epic Investment Services, explained how Epic has repositioned 103 St Centre in Edmonton (and other assets) to include common meeting rooms and recreation spaces, which will benefit tenants by leading to lower requirements for rentable office space.
As well, it is a reasonable assumption that some people will prefer to work from home. In my business I speak with a lot of people and I have heard a variety of opinions including some that love the thought of working from home.
Conversely, I have heard from others who can’t wait to be immersed in the hustle and bustle of downtown life. Personally speaking, I know how they feel.
But these are all just opinions, and the facts outweigh opinions. So, what are the facts? I sure wish I had copyright on the facts, but I don’t. I can, however, make a few factual observations. Let me start with a general observation: human nature doesn’t change. The bell curve is a long-established guide to many things, and I believe it applies to human nature as well.
Following the bell curve, we can say that a small segment of the population at one end absolutely loves to work from home and a small segment at the other end absolutely thrives on the hustle and bustle of downtown. In the middle will likely be a large group of people who could go either way, and on the shoulders will be people who either somewhat prefer working from home or somewhat prefer working from the office.
With this information in hand, if we exclusively followed the bell curve, up to 50% of the population could conceivably work from home with varying degrees of satisfaction, but of course this is not the only consideration.
The next factor to consider is productivity. Again, I think it is reasonable to refer to the bell curve and postulate that a small percentage of people are very productive, a small percentage are very unproductive, with the rest of the population falling somewhere on the curve. In other words, on average, we as a population, are moderately productive. Moderately productive is generally not good enough for business owners and managers, and they are always looking for ways to increase productivity.
Okay, so which is better for productivity, working at the office or from home?
I have to argue the office is the better environment. Only a small percentage of the population will be highly productive in any environment, the rest of us need some degree of supervision to keep us off of Facebook, the phone with mom, or booking our next vacation. I just don’t see this being reasonably achievable in a home office.
As well, having worked from home a lot the last year, I have noticed that the fridge, the TV, Facebook, and my pitching wedge are just too close for comfort, a complaint I have heard from many folks working from home over the years.
And my final point in this regard is a couple comments made by Chad Boddez of JLL Edmonton. First, a lot of business gets done by people being able to walk ten feet to a colleague’s office to throw an idea around or just by running into clients and prospects on the street during lunch or walking to other appointments.
Conversely, one of my clients commented on how we don’t need to go into the office as we can meet online or in coffee shops, especially with today’s technology, and that is certainly true. As well, we can quickly find a file in online storage and share it with others electronically.
Regarding the saving of 25-30 work days/year by not commuting (not to mention transportation cost savings). The cost savings are pretty much indisputable but the saving of 25-30 work days is questionable. The problem arises in that the work week is still 5 days. As well, the very same technology that allows us to work from home tends to creep into our home time. The problem I see is that, because we are generally expected to be available and working 5 days during most weeks, the time saved not commuting is of limited value. We can’t save the 20 minutes from today and add it to the 20 minutes from tomorrow and make a 40-minute time slot, nor can we stitch them together to make a 24 hour day. The 20 minutes I save today is still stuck in today and, really, there is very little we can do productively in 20 minutes. Because of this, I feel the time savings will really translate into somewhat less than 25-30 days. For sure we will be able to work some longer days and take some days off in lieu, but the world is a competitive place and work will always be pushing the boundaries of leisure time.
And finally, while some folks will experience prolonged fear of crowded spaces, most likely most of us will get over it fairly quickly and will be back taking busses and going to the tavern for a pint.
Now it is possible I am missing some other subtle points but I cannot think of anything. So, what do I think based on all this?
I’m going to run with the unchanging character of human nature and predict that, while there will certainly be a reduction in required office space, it will be small. There is a reason human being have been meeting and working in business spaces for centuries and I don’t see that changing. We all know the popularity of the village square across Europe and other parts of the world. Much of North America is adopting the village square concept and going toward walkable spaces and transit-oriented development (TOD). The energy we get from just being around other people is something that calls to us on a primal level.
Additionally, we live in a competitive world, and landlords will be sure to adopt new technologies to make the office a more open, engaging, highly productive place to be. We are already seeing some of this.
In fact, with the growing trend toward the Village Square concept and TOD previously mentioned, I believe there will be a growing trend towards office spaces gathering around the many village squares spread throughout the city (for example, Whyte Ave, 124 St, etc., in Edmonton), that the reduced commute times will reduce the time benefit gained from working at home.
Over time, this will likely result in some of the work from home employees returning to the office.
In the next chapter of our post-covid world, I will discuss some of the considerations around a post-covid retail world I have heard from podcast guests, clients and industry experts. There are some exciting changes happening and coming in the retail world. Let’s talk next week, I’m off to the office!