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Office Space Post COVID-19

Office space was already evolving prior to the pandemic of 2020. Now its set to change again in ways no one could have predicted less than a year ago.

Office space was changing pre- COVID 19.  Cubicles had given way to wall-less open spaces and communal work areas.  Now, the inspired “collaborative” office layout that was all the rage seven months ago is unrealistic in today’s world that mandates social distancing.

Rent payments, typically one of the largest expenses of a company, are particularly painful for business owners to make on scarcely occupied office space. While enduring the remainder of a commercial lease “as is” might very well be the only option currently, prepare for leases and office space to look very different in the future. 

Ways commercial office space will be changing.

Length of Lease. Prior to COVID there were financial incentives for signing longer leases.  However, in a COVID world- where clearly anything can and frankly has happened, long lease terms do not feel like wise business decisions. They feel risky.  Assume that 5, 7- and 10-year lease terms will become popular options of the past.  

Additional details to “force majeure” clauses. Most force majeure clauses already list events such as strikes, acts of God, terrorism, fire, flood and earthquake.  Unfortunately, many business owners learned in 2020 that “pandemic” had not made the list on their commercial lease force majeure clause. Assume in the future, business owners will eyeball the clause more carefully and insist that terms such as “pandemics” and “closure due to public health orders” are specifically mentioned.

The opportunity to downsize. The pandemic has created an opportunity for businesses to downsize.  The feeling that every employee must work from the same office, at the same time, is diminishing.  Many businesses, in order to maintain proper social distancing, are keeping some employees working from home permanently and alternating the days and times other employees come into the office.  The result is a much smaller square footage requirement which could result in significant savings on rent for business owners.      

The rise of “smart” offices. Office buildings will need to anticipate that significant portions of work populations will be working remotely-permanently. Thus, the IQ of an office space will be incredibly important as employees start “plugging” in. Commercial real estate owners will need to invest in making their properties “tech savvy”. This means significant investment in, for example, great internet. Crafting ideal spaces for meetings that can expertly accommodate participants joining in remotely.  Taking on technical issues that in the past were often left up to the tenant to upgrade will be of significant importance for landlords to tackle in order to attract quality businesses to their properties.

Clean and safe buildings. With the arrival date of a COVID vaccine still unknown and the knowledge that other viruses could be just as devastating in the future, commercial real estate will need to become both clean and safe.  Redesigning existing buildings and creating new floorplans to accommodate social distancing will be important. Thought to the types of surfaces installed in public areas that can withstand frequent cleaning as well as repel viruses will outweigh more traditional finishes. Ventilation systems, HVAC and other air flow mechanisms will now be top considerations. It is no longer simply a concern as to whether or not these systems blow air, but more importantly, how is it blowing?  Is the system old and outdated?  Does it merely move around the same stale air from office to office or is it actively replacing it with fresh?  Is there a QVC light being utilized to kill the airborne viruses?         

Beauty counts. Office spaces will need to be more “alluring” to employees.  Traditional office space will now be in direct competition with an employee’s home office.  The traditional office space will need to be pleasant enough that an employee will be willing to forgo working from home in yoga pants in exchange for an office environment that is equally satisfying.  Perhaps this means the office spaces will need to be more beautiful? Relaxing? More conducive to concentration?  Perhaps there will be a shift in consideration when designing office space?  A focus primary placed on the employee’s workspace versus the client experience?  Perhaps the new design focus will be on making the work areas as attractive as the public areas?  

What the actual aftermath of COVID will be on office space in the future remains to be seen.  What is certain is that the way we do business has changed, radically in the last year. Large scale disruptions such as the Coronavirus pandemic demand that businesses reimagine their practices. Undoubtedly the commercial real estate industry will change, greatly in upcoming months and years. Those landlords that readily adapt to the new needs of their tenants will flourish.  Those that do not, will flounder.

Law 4 Small Business, P.C. (L4SB). A little law now can save a lot later. A Slingshot company.

     

 

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