Tuesday, September 15th, 2020 September15th2020

Sell for More News: The office is evolving…and here to stay

Published on September 15th, 2020

Sell for More News is a weekly blog series with interesting information from the world of commercial real estate.


Though there are many forces at play, I believe an office environment will remain relevant and important in the long term.

The current discussion about the future of office demand is mainly based on surveys or anecdotal evidence like statements from business leaders or a small sample set of actual lease decisions, and even those decisions may be short-term in nature.

There are valid arguments on both sides. Below are some common points:

Positive demand signs

In the short term, de-densification to accommodate social distancing rules has a positive effect on office demand as some companies are choosing to rent additional space. This should partially result in a long-term pattern due to an increased focus on health and well-being.

Over the last three decades, office density went from 300 SF per employee for the average office user to as low as 75 SF in the case of some co-working operators.

While some of the more extreme density is driven by economics and affordability, there is a general expectation that more companies will revert and de-densify their spaces for productivity reasons, in addition to health.

Office developments that are already under construction will certainly be completed, but as a response to a potential adjustment in demand and rent levels, future developments will slow down over time and lead to a new equilibrium. This will especially apply to speculative developments.

Negative demand signs

Recessions lead to bankruptcies, right-sizing, and a suppressed appetite for expansions, with downside pressures on office demand and rental rates.

Hub-and-spoke model.  Occupiers will likely retain their main headquarters, but reduce their footprints in densely populated city centers, while offering their employees flexibility by granting them access to a secondary office or co-working location closer to home.

The longevity and depth of the adaptation of Working from Home policies will arguably be the most relevant factor for future office demand.

Working from Home

The implementation of Working from Home during the pandemic has undoubtedly worked better than many had anticipated and should lead to an increased adaptation of more flexible work models. The often-cited advantages are lower to no commute times, flexible working hours, and with those, an improved work-life balance.

However, certain drawbacks that come with the Working from Home paradigm should limit extreme adoption of Working from Home and will protect office demand in the long term.

Information flow can be asymmetric and lead to dissatisfaction and a feeling of disconnection. For senior-level employees, this could result in an imbalance in decision-making and an exacerbation of political tensions, as employees who are not physically present could lose influence. This may apply in the case of promotions, layoffs, and other organizational decisions.

Employees, especially those in lower ranks, will miss out on training opportunities and the ability to spontaneously join meetings and learn soft career-building skills.

The hiring process becomes more complex in a virtual world, with employees potentially living in another city or state than their managers. This also complicates the creation and maintenance of a corporate culture and team unity, which in turn may reduce loyalty to a specific employer, as job changes across state lines may not even require moving the primary residence.

Questions surrounding motivation and distraction, which ultimately may lead to productivity losses when purely Working from Home. Personal living conditions vary by economic situation and stage of life, and can therefore complicate a productive work set-up, which is already lacking inherent structure.

Parents working at home may be encumbered with childcare responsibilities, and others may be distracted by roommates in a relatively small city apartment without privacy or physical working space. Clearly, not all remote working is created equal.

Lack of a work persona that breeds an office-based social world where friendships and even deeper personal relationships are forged.


Though there are many more arguments on both sides, an office environment is sure to offer inimitable benefits with regard to productivity, creativity, motivation, corporate culture and social interaction that will remain relevant and important for employers and employees in the long term.

This explains why big tech companies create “office meccas” with extensive amenities and company cultures that spur many of the afore-mentioned positive aspects.

Co-working companies, in the same vein, literally took people out of their homes or nearby coffee shops and placed them into an office environment.

Once the health crisis subsides with a lasting medical solution, we should see a strong re-engagement in the office space.  Looking ahead, while we can expect a somewhat increased adaptation of Work from Home and other flexible policies, the office is certainly not dead…just evolving.


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About Beau Beach, MBA CCIM

Beau is a tenacious Commercial Real Estate Broker, author and adoring father of four. His clients appreciate his no-nonsense demeanor and his legendary work ethic.

Beau leads Beachwood which is a commercial real estate broker for sellers in the Nashville, Milwaukee and South Florida markets.

He’s the author of the books The 3 Reasons: Why Most Commercial Properties Don’t Sell and True Wealth: What Every Seller Should Know About 1031 Exchanges.

Beau can be reached at 800-721-3287, click to schedule a call or Beau@soldbybeachwood.com