Commercial real estate leaders shared insights and ideas for how building owners and tenants can safely and successfully navigate the post-pandemic return to the office during NAIOP New Jersey’s recent “Back to the Future of Office” webinar. The commercial real estate development association’s virtual program addressed critical issues including in-demand tenant amenities, how office buildings can be retrofitted or upgraded to promote health and wellness, and what digital and proptech solutions can add value to office assets over the long term.
The future of work may be a remote/office hybrid
David Craig, strategy director with Gensler, shared recent findings from national studies the firm conducted in April and August to gauge the pandemic’s impact on the worker experience. Differences between the two surveys showed that, for remote workers, the individual work experience has declined. “Those working 100% from home reported that, while they are able to complete more individual work, they are more fatigued and their sense of accomplishment has dropped,” said Craig. “This suggests that if we continue to do this long term, we could be facing large scale burnout.”
On the other hand, hybrid workers – those splitting their time between home and office – are much happier and more productive than people working 100% at home or in the office. “When asked how they want to work when COVID is over, 65% of those at home today want to be hybrid in the future,” said Craig. “Another 11% don’t want to work from home at all, and those in the office now want to work in the office.”
Worker preferences are closely tied to the length of their commute. “Not spending time commuting is what people like most about working remotely, but connecting is what will draw them back to the office,” Craig noted. “To have the flexibility they desire, more than half of those who want to work hybrid are willing to forgo their own desk for more collaborative spaces.”
When it comes to re-envisioning future workspaces and campuses, Craig said it is essential to build in opportunities for change. “The future is uncertain and the hybrid way of working is largely unprecedented. We are designing spaces for team-driven use that can be used in more than one way.”
Navigating the return to the office
Timothy Greiner, executive managing director for JLL’s New Jersey office and retail leasing brokerage group, moderated a panel that examined what developers, owners and management firms have learned during the pandemic, and what they are doing differently to meet the needs of tenants returning to the office.
“We haven’t changed what we’ve been doing,” said John Saraceno, Jr., co-founder and managing principal of Onyx Equities, LLC. “We believe this is a moment in time. And in times like this, it is important to take a deep breath and ask, ‘What are you building? Is it still the right thing to do in a changing environment?’ We’re making educated guesses about what the future holds.”
Sam Morreale, founder and managing partner of Vision Real Estate Partners, said his team’s biggest task is listening to tenants and understanding their needs and concerns. “Different tenants have different risk profiles. Some have shut down until there is a vaccine while others never stopped working. Good landlords follow the Disney model: they know their tenants, their personalities and work with them to provide exceptional service. The reality is, landlords are in the hospitality business now.”
The pandemic has clearly impacted what office tenants are looking for in terms of amenities. In some cases there has been an acceleration of what was trending before COVID, such as demand for flexibility and more collaborative workspaces. “For us, a smart office is an agile office,” said James Casey, regional director with Marsh & McLennan Companies. “Before the pandemic, we were moving toward having no offices and creating collaboration spaces. This was a big shift for the company and it was a struggle. Now, those who doubted the model see that people can be productive, and they are willing to give up dedicated space to have flexibility.”
The demand for health and wellness amenities also has intensified. “We have done amenities to attract millennials, but now we’re moving to another level,” said Morreale. “It’s no longer about putting a gym in the basement with no windows or offering wrapped sandwiches and a salad bar. We’re going with really cool amenities – like saunas and massage rooms, visiting nurses and healthy food service options – to create what we call a suburban urban environment.”
Remote working is driving an increased focus on walkability and access to nature. “What’s shooting up the list of office amenities is personal wellbeing, and that’s what outdoor space can provide,” said Saraceno. “We’re looking at how to create outdoor space in Newark that replicates what people have at home.”
Evolving strategies for office wellness
In line with the growing importance of sustainability and wellness in commercial real estate, Marcus & Millichap’s Rick Lechtman facilitated a discussion focused on strategies and technologies for creating safe, healthy offices.
“If people are your priority, you need to focus on health and safety and be open to what the work-from-anywhere evolution means,” said Patrick McGrath, Savills’ chief information officer and head of client technologies. He sees a significant shift already underway of leasing and portfolio management migrating to digital tools. “Zoom, Slack and proptech-specific companies are being incorporated into our day-to-day. Virtual tours and presenting demographic information through a visual medium is powerful, and smart building investments to showcase a building’s health and wellness capabilities will continue.”
Erica Godun, director of regional operations with Ware Malcomb, said, ”We’ve already met COVID-compliant guidelines. The next phase is how to incorporate the feel of home into the built environment.” Landlords and occupiers are seeking certifications that go beyond LEED. “LEED is still the biggest player in healthy environments in commercial real estate, but it focuses on building construction. With the need to get workers back to the office and engaged, more companies are considering newer certifications, like WELL and Fitwel, that focus on the wellbeing of those occupying the building.”
Nick Shears, director of leasing and marketing with Hugo Neu, said that when his firm was developing the Kearny Point office project, “WELL certification was more of a priority than LEED, given the existing infrastructure of the buildings. We could not do both, and the tenant experience was more important.”
While Kearny Point tenants are increasingly looking for wellness amenities at work, Shears noted that his firm was dedicated to creating a safe and healthy environment at the site long before COVID. “For instance, air quality has become vitally important to tenants small and large. Before COVID, the air inside Building 78 was safer than the air outside. Now we’ve upgraded to hospital grade MERV 13 air filters, and our Atmos Air Purification System destroys indoor pollutants to restore cleaner air.”
Other important tenant safety features include UV light technology, touchless entry, numerous interior staircases, extra-wide corridors and continuous surface sanitization. “Our strategy has paid dividends this year, helping us maintain positive absorption from the lockdown to now,” said Shears.
McGrath believes that in the face of uncertainty, building owners must continue to make appropriate investments in assets to meet the expectations of their customers. “Long term, there will be demand for office space. But even when we go back to working in the office five days a week, we can’t unsee the future. Certain things have been crystalized during the pandemic that are not going away. It’s a complicated conversation.”