Will Working From Home for COVID-19 Change The Amount of Office Space Needed In The Future?


As the U.S. and other world nations begin considering ways to reopen their economies, businesses are taking a closer look at the way they work. When COVID-19 was declared a global pandemic, many companies were forced to do something they had been resisting for years - move to remote working arrangements. Several aspects of COVID-19 could have an impact on the future of commercial real estate.

More People Working from Home

When states began issuing shelter-in-place orders back in March, an increasing number of workers found themselves pushed out of their offices and asked to work from home. Not surprisingly, this is a situation that many employees had desired for years.

According to Owl Labs, about 80 percent of employees want to work from home at least part-time. In 2018, just 5 million employees, or 3.6 percent of the U.S. population, were working from home half-time or more. Because of COVID-19, about one-third of Americans are now working from home.

Of course, some jobs are better suited to remote work than others. Positions that don't require a lot of collaboration, such as programmers, analysts, accountants, and processors, can be done remotely. Whether remote workers return to the office or not, there may be some lasting implications for the commercial real estate industry.

How COVID-19 Will Impact Commercial Real Estate

As states and counties re-open, it's unlikely to be "business as usual" for many companies. In fact, the battle for survival has become very real. In April, there was a 26 percent increase in Chapter 11 filings from the prior year, with major brands like J.C. Penney, J.Crew, Gold's Gym, and Neiman Marcus on the list. Even if doors aren't shuttered, a recent PWC study found that about half of businesses anticipate a drop in productivity due to the pandemic.

Companies that remain in operation will need to rethink how they do business. Some will continue to allow remote work, and others will ask that their workers come back into the office. How these decisions will impact the commercial real estate space remains unclear.


What Will the Office Look Like Post-COVID-19?

In a world not impacted by a pandemic, more remote workers translates into a need for less commercial space. But, in the current environment, organizations must make adjustments to the way their office space looks and works to allow for social distancing and prevent the spread of germs.

For the past several years, office spaces have become more densely-populated with a trend toward open office plans. In general, there is little separation between co-workers, who are often seated face-to-face at workstations. This is likely to change.

Companies that had been trying to get by with less office space could require more to allow for physical distancing. This could mean more physical offices for workers, or at least more space between cubicles. Further, conference and break rooms will need to be larger to accommodate the same number of people.

Commercial real estate firm Cushman & Wakefield created a new design concept called the "Six Feet Office" that allows for a six-foot distance between workspaces as well as physical barriers and foot traffic routing to diminish face-to-face encounters. According to Julie Whelan with CBRE, "It is too early to tell if companies will lease less space." The trends of needing less space due to remote workers and more space due to social distancing could cancel each other out.