Tech's towering challenge - if the future is Working From Home, what are we going to do with all those skyscrapers we bought?

Profile picture for user slauchlan By Stuart Lauchlan February 10, 2021 Audio mode
Summary:
If everyone's going to be working from home in the Vaccine Economy, what becomes of all that real estate that tech employers have accumulated over the years? What - and where - will the Office of the Future be?

skyscraper
(Pixabay)

The ongoing debate around the post-pandemic Future of Work has focused heavily on the enforced shift to remote working, aka Working From Home (WFH). The future, it is assumed by most commentators, will be hybrid-shaped, with knowledge workers unwilling to make the daily commute back to a corporate office part of their routine again. 

That being so, there’s an obvious question to be addressed - what do we do with all those skyscrapers that tech firms have spent so much time and money on building? If the workforce is intent on staying close to home, there’s a lot of space going begging in a lot of real estate around the world. 

A number of tech firms have made public some of their strategic assumptions about near to mid term policy and practice, with Twitter, for example, recently confirming that nearly all employees will have a WFH option ad infinitum. While there are some dissenters - Netflix CEO Reed Hasting openly admits he can see no upside to WFH! - this is a trend we’ll hear more and more about as vaccine programs kick in and the possibility of re-opening the office doors becomes more feasible. 

Yesterday, Salesforce CEO Marc Benioff was in Singapore, hosting the first of the firm’s World Tour events for 2021 where he talked up the company’s new pitch as being the enabler of the “working from anywhere” operating model for customers, declaring. 

We have to look at, where is the future working? 

Back at base in San Francisco, the ‘where’ was pinpointed as pretty much wherever employees want it to be, as Chief People Officer Brent Hyder explained that internal research had found that nearly half of Salesforce staff only want to come into the office a few times a month. That being the case, the company sees a tripartite post-COVID model for working: 

  • Flex – When it’s safe to return to the office, most of the employees around the globe will work flex, meaning they will be in the office 1-3 days per week for team collaboration, customer meetings, and presentations.
  • Fully Remote – Employees who don’t live near an office or have roles that don’t require an office, will work remotely full-time.
  • Office-based – The smallest population of the workforce will work from an office location 4-5 days per week if they’re in roles that require it.

Build high for happiness

Now, Salesforce has been pretty busy over the past few years when it comes to putting down real estate roots around the world,  spending millions of dollars and building high in the sky in the process. In San Francisco, where the company is the largest single employer, the 61 storey Salesforce Tower is the Bay Area’s tallest building, looming over an inner city campus of offices which, assuming regulatory clearance is given, will soon be added to by Slack’s nearby corporate HQ. 

Meanwhile in London, Salesforce took over the lease of - and renamed - the existing Heron Tower in the City district, which at 36 floors high - ten of which are occupied by Salesforce itself - is the one of the tallest buildings in the capital, third only to The Shard and One Canada Square (aka Canary Wharf). And the list goes on around the world - Paris, Dublin, New York, Tokyo etc etc - as Salesforce Towers become a part of the corporate landscape. 

Given that, it’s fortunate that employees haven’t entirely turned their backs on office life. Salesforce’s research finds that four-fifths of staff do want to maintain a connection to a corporate physical space. Hyder explained:

The majority of our employees will go back to the office at least some of the time. And we’ve learned that 80% of our employees are hungry for the connection, camaraderie and innovation that come from gathering in-person.

But they’re also going to approach that physical corporate environment in a very different way. Salesforce has been highly proactive in its efforts to produce tech to support a safe return to the office via its work.com offering, but as diginomica noted last year, tech in and of its own right is only part of the picture; there needs to be trust on the part of the employee that they genuinely are returning to a safe place - and as Salesforce’s own ongoing research indicated, that trust can't be taken for granted.  

Office of the Future

What this is going to mean is the need for a forensic examination on the part of employers into what their office space looks like and how it operates. To the question of what does the Future of Work look like, let’s add the equally-important, what does the Future of the Office look like?

Over at Slack, co-founder and Chief Technology Office Cal Henderson, says his firm, one of the winners from a macro-shift towards remote collaborative working, has been wrestling with this question: 

The nature of the office changes. Prior to the pandemic, our offices globally were very oriented around a seat for every employee [and] every employee going to be in the office every day. While we had a lot of collaborative and meeting spaces, I think that ratio is going to change pretty significantly. It's similar to the Dropbox manifesto around how they view their offices in the future, which is that offices are much more of a space for people to meet than for people to come and work. 

This ‘shape of things to come’ angle is one that has inevitably been front and center for IWG [International Workplace Group], probably still better known to most as Regus, the provider of serviced offices and co-working spaces across 120 countries worldwide. According to CEO Mark Dixon, while COVID has accelerated the shift to WFH, that trend was underway pre-pandemic:  

In the digital world, not all workers want to be forced to commute long distances in their own time to go to a workplace. From a company's point of view, the cost of housing people in large work centers in a digital world really makes no sense. There's huge savings if you give workers what they want, which is the ability to work near where they live or own [homes] and have less places in central points. 

That’s not to say there won’t be corporate HQs in the future, he adds: 

Companies will still have headquarters, but the purpose of the headquarters is to have the name of the company above the door and to bring people together so that a culture can be created. It'd be very hard for companies to operate successfully without ever bringing people together. There is no camaraderie, there's no learning from others around you, and so on.

Headquarters will still be there, but they'll be smaller. If you think about these huge buildings in London or New York or wherever, basically 5000 workers come together in a huge building. That will become - not for every company, but for many companies - a thing of the past. You'll have a smaller iconic building, where you bring together your team from time-to-time to get them to imbibe the company culture. It's a place to collaborate. It's a place to celebrate. It's a place to meet your colleagues and go out for a drink afterwards. It's a social thing. It's about being part of something. 

For his part, Dixon says that over the past year, IWG has seen “a significant number” of companies dropping their headquarters and downsizing to its facilities. But the elephant in the room still remains all that very expensive real estate, often situated in city centers, and the financial liabilities associated with them. Working out what to do with that will be a challenge, admits Dixon: 

It will take time because companies have to lose the space they have. They can't automatically just get out of the lease space or the owned space that they have, but over time they will. You will get a continuous move in the next two, three years to a much, much more flexible workplace.  

My take

The question of what happens to the bright and shiny real estate is going to be one of the complicating considerations that becomes more dominant as the COVID crisis lifts. The shift to WFH is here to stay. The cork is out of that particular bottle for too many people. The work/life balance benefits that have accrued, even against the wider backdrop of COVID lockdowns, will see to that. 

For employers, there are benefits to be had. A regular theme we’ve heard over the past months has been that of surprise that employee productivity hasn’t dropped off just because the team isn’t sitting at their desks in a tower block on an a business campus - and indeed some organizations have pointed to an uptick here. And leaving aside the ‘brand ego’ aspect of having huge corporate buildings, there are clearly cost-savings to be had from not having so much real-estate to manage, assuming you can extricate yourself from whatever leases you’re tied into. Ridding yourself of buildings will also help with your ESG [Environmental, Sustainability, Governance] commitments as well. 

Moving outside of the tech space briefly, comments made by Peter Williams, Chairman of fashion retailer Superdry, make the benefits point well as he argues that cities need to evolve into “living cities”: 

What's been really interesting during the pandemic has been that the cities that are 'liveable cities', where people live and work, have done much better than those cities where people commute to and it's too expensive for normal workers to live. Those have done very badly. Hopefully you will see in the coming years a re-pricing. A city like London will become a much more liveable city. Some of the office buildings are going to get converted to accommodation. The cost of accommodation will come down, taxes will come down and so on and it becomes a great place to work in the future.

So who loses? Well, there is the ecosystem of people and businesses whose livings depend on the corporate skyscrapers, from building maintenance staff through cleaners to local cafes, bars and shops whose traffic relies on people piling out of an office at lunchtime or in the evenings. Then there are the building owners themselves, suddenly looking at lots of unoccupied property. (An idealistic solution here, of course, would be to convert unused commercial property into accommodation as Williams suggests and tackle city center homeless crises, but that’s a wider long term political and economic debate waiting to be had.)

Bottom line - striking the hybrid work model balance is going to be a challenge for many. As noted, headquarters and corporate buildings aren’t just going to vanish. Employees want to have their cake and eat it here - they may not want to go the office every day, but it’s nice to know it’s there for when they do want to pop in. Within those offices, things will have to change post-pandemic. Even in a Vaccine Economy, the employer approach to health and safety will have to remain rigorous. Hot desking no longer looks as appealing if you don’t know who used the desk last. Creating social spaces for employees to chill out and hold impromptu meetings was a great idea until it wasn’t and social distancing became the order of the day. (Salesforce Tower London capacities may be reduced by 40-50% of their pre-COVID capacity to meet new physical distancing requirements, for example).The list goes on. 

None of this is unachievable. The technology, be it from Salesforce, ServiceNow, Workday or any of the other vendors who have table stakes here, is there to help with re-inventing the office and ensuring a safe return by employees, while the logistical challenges present fresh opportunities for good office managers and facilities management professionals to show their mettle in much the same way that a remote workforce brings new responsibilities for HR teams.  

But it’s another set of practical considerations that needs to be taken into account by any organization when happily parroting the new orthodoxy of WFH. And in those considerations, the human implications need to stay front of mind. Turning to Superdry’s Williams again: 

I just go back to the human side of it and particularly to people who are new to companies, new to work, just living in a small place or sharing a flat with many other people. For them I think it's really important to have that personal contact with people. That place doesn't have to be the old head office, it can be a remote remote place where people gather, but I do worry about this human part of us being human beings.