We’re about to see a drastic and more importantly permanent, drop in office building occupancy. Professions like law, accounting, marketing etc. have all come to realize they can function just as easily without the costs or long commutes, associated with office space. These and other tenants are certain to stop renewing their leases. Even those who do use an office, will lease significantly less space as they realize how easily, various jobs and roles can be performed from home. What once was a rarity, will now become the norm.
The major benefit of going virtual for employers will be drastically reduced overhead. Eliminating the huge overhead by switching to a virtual business platform will not only be good for the bottom line, but those savings can be passed on to clients and allow nimble market adaptors to capture market share. At Shelton & Steele, we saw this years before covid-19, when we began specializing in small to mid-sized firms and more importantly, virtual firms. Virtual Law firms were offering the same credentials as the BigLaw firms that peopled them. They offered lower rates for the same or better level of legal product and focused on something their BigLaw counterparts did not: Rendering the greatest value for the dollar. That enabled them to capture clients ranging from start-ups to Fortune 500’s. Because the reduced overhead allowed them to pay partners seventy or even eighty percent on their portable books of business, they also captured and now especially, continue to capture premium talent.
Covid is simply accelerating what had already begun.
Another beneficiary in the Post Covid Era will be employees. They will be able to set up their workspace as they wish, create flexible work hours, and even work from what previously was only considered a vacation destination! Additionally, they will see a dramatic reduction in the costs of gas and maintenance for the personal vehicles. Finally, they will be relieved of the stress that accompanies commutes that previously stole two hours out of every workday.
Finally, the environment will benefit. During the lockdown period we saw the canals in Venice become so clear, that you could see fish swimming on the bottom. We saw skies free of the greys and browns of smog. While we won’t maintain the level of emissions reductions that were realized during lockdown, reducing the commuter output by thirty percent or more, will definitely have a positive impact.
The final factor is that will leave literally millions of offices will remain empty in the Post-Covid Era is Millennials and Post-Milennials. Younger people have taken note of the positive impact that Covid has had on the environment. They are much more concerned about the environment than older generations and much less concerned about the status quo. The best and brightest will create a professional labor market which requires a virtual option.
Of course there will be challenges. Creating a sense of community and collaboration will require more creativity on the part of management. At Shelton & Steele we all came up with the idea of a “Virtual Water Cooler”. We maintain our esprit de corps by scheduling calls with a different member of the team each week. We discuss our families, hobbies, or anything else that’s on our minds – sometimes we even talk about work! We just make sure it’s done in a way that doesn’t feel like we’re working. People then develop friendships and end up video-conferencing with one person more than everyone else – which is exactly what happens at physical water coolers or in break rooms.
While Covid will have an impact everywhere, the big question is what will happen in markets like New York? When hundreds of thousands of offices are left empty, what will become of them? The Covid Era already has people moving away from high density, urban areas and that trend will continue in the Post Covid Era. So converting the offices to condo’s probably won’t be a successful strategy.
The world is about to change in ways we can’t even fathom. But there are a few things we can predict and one of them is The End of the Office Era.