Bosses are reworking their company offices, even as Omicron is expanding the remote work trend, which has allowed many of its workers to work from home since the outbreak of COVID-19 in early 2020. kept to do.
In a sign that leaders still prioritize solidarity, the year ended in positive territory after most of the office leases in Los Angeles County fell during the pandemic.
This change shows that executives are optimistic about the future of their businesses and have decided that it is important to have offices, even if their employees will continue to work remotely for some time in the coming years.
“People love the hybrid model,” said CBRE real estate broker Todd Doney, “which divides their labor between office and home,” but the thought that offices are dead is far from reality. Offices will be an important component for this.”
You wouldn’t know that from walking into a typical office building these days.
The number of people working in them has been small since the start of the pandemic and then decreased significantly as the Omicron version grew. The average office population in the nation’s largest metro areas fell from about 40% in mid-December to 28% in the week of January 5, given the key-card entry system used by many companies and to monitor labor patterns. tracks. Card Swipe.
In the Los Angeles area, the average office population at the start of the year was 26.5%. Omicron is taking a toll on occupancy, said John Barganski of Brookfield, L.A.’s largest office landlord.
The population in Brookfield’s buildings, which includes some of the city’s most prominent skyscrapers, stabilized at more than 20% in 2021. Bargansky had estimated that numbers would start to climb earlier this year, but according to Omicron, tenants are again pushing their comebacks. Later dates in the first quarter.
“They are definitely planning to come back,” he said, “probably a little slower” than he expected a few months ago.
The number of employees to be expected in the office on a given day is yet to be determined by many companies as they try to manage relocation desires from employees, many of whom preferred to work on their own. Is.
In a recent survey by international workforce consulting firm Korn Ferry, nearly three-quarters of respondents said they would now return to the office if mandated to do so, but 27% said they would go part-time, or refuse to return to the bus. Will give leave.
While 64% said it would make them “happy” again with their coworkers and almost half said that returning to the office would be good for their mental health, 51% said that returning to the office would have a negative effect on their mental health. Health.
Dan Kaplan, a senior fellow at the Los Angeles-based Corn Ferry, said the divide over how people think the office will affect their psychological well-being reflects today’s uncertain times, including the waxing and waning epidemics.
“Every day we feel like we finally have the consistency, and then we don’t,” Kaplan said. “Back-to-the-office is stuck in the middle of that.”
For its part, Korn Ferry will continue to maintain offices, he said, but is not forcing people to go back to work.
“Our expectations will remain fluid,” Kaplan said.
Working in the office with your peers is a boon to your state of mind, claims Elizabeth Brink, a regional managing principal in workplace consulting practice at the architecture firm Gensler.
“I firmly believe that the overall mental health of employees improves over time,” said Brink, who began returning to his Los Angeles office last summer. “Conversation is really important for mental health.”
In a workplace survey last year, Gensler found that employees at top-performing companies preferred the office for a broader range of activities than workers at non-ranked companies, including deep concentration, brainstorming, and creative work. Are included.
Gensler has ranked the top-performing companies on such lists as the “Most Admired, “Best Place to Work” and “Most Innovative” firms in recent years.
Employees of those companies also sometimes want the flexibility to work from home and other locations outside the office. Other places to work may include outdoor spaces set up by independent coffee houses or their companies for work, meetings or relaxation.
Leaders at top-performing companies value in-person interactions and see the physical workplace as a means to drive performance and innovation, Gensler found.
“People are realizing how important relationships are for doing great things, not just being productive,” Brink said.
While these companies will be flexible about where people work after returning from pandemic isolation, they also want to keep people who work as teams to come into the office at the same time.
Some companies say they will need space elsewhere in the future to create a collaborative, engaging environment and motivate people to work in the office.
Gensler found 44% of top-performing companies, compared to only 12% of unreserved companies, are expected to need more real estate after COVID – and 27% said they are looking to increase their real estate footprint by more than 25% hope to increase.
Landlords naturally expect tenants to expand their offices in the coming years, but many companies are looking for ways to reduce their rented space as their employees choose to work off-site at least some of the time. Huh.
For example, healthcare firm MedPoint Management gave up half of its office space last year, while retaining its workforce of about 800 employees. Half of them work mostly at home and the rest some days at home and others in their Sherman Oaks office.
Office leasing demonstrated the staying power of offices in the fourth quarter, even as some companies like MedPoint find ways to reduce their space.
CBRE said total vacancy (unlearned space) in Los Angeles County remained high at 17.9%, higher than the same period a year ago, but slightly lower than the third quarter when vacancy was 18.2%. was, CBRE said.
Moving the needle were big leases by entertainment firms such as video game developer Riot Games and television streaming provider Roku Inc. Many were in favor of the Westside neighborhood or South Bay, where the Los Angeles Chargers agreed to rent a new headquarters built to their specifications in El Segundo. ,
Western Los Angeles County, including Culver City, also draws tech firms, particularly those involved in entertainment content creation, such as Apple and Amazon.
Google has agreed to lease the former Westside Pavilion indoor shopping center, which is being converted into offices by two separate developers, one of which is Hudson Pacific Properties Inc. The former mid-century Macy’s building is being converted into an office complex. The West End is called and owned by GPI Co. Looking for tenants.
CBRE said other new large office projects, including Brookfield’s California Market Center, are helping keep average vacancy in the Los Angeles area. Brookfield announced this week that sportswear maker Adidas has agreed to occupy the top floors of two interconnected buildings at the Center, a sprawling former showroom complex in L.A.’s Fashion District, which Brookfield has rented offices. Spent more than $250 million to replace.
After sputtering in the first half of the year, when many tenants were reluctant to make commitments, leases in Brookfield’s buildings became so strong that totals approached the level of a typical pre-pandemic year, Bargansky said.
“I think companies found that they were doing better financially than they thought,” he said.
Office landlords are determined to maintain their rental rates during this pandemic. The asking rate in Los Angeles County rose to $3.92 per square foot per month in the fourth quarter, up from $3.88 in the previous quarter and $3.74 in the same period a year ago.