The General Services Administration (GSA) is an independent organization that helps the federal government build and procure office space, workspace services, and technology. They ensure government agencies have the space and tools they need to serve the public effectively.
GSA manages 375 million square feet of federal real estate. About half of that footprint is commercial office space leased to private organizations. GSA commissioners have a firm grasp on office space needs and trends. Two former commissioners, Bob Peck and Dan Mathews, spoke with Density CEO Andrew Farah about the impact COVID-19 has had on the office and the importance of the workplace. Watch the full conversation below:
Key takeaways
- Physical office space is still important for collaboration, culture, and trust.
- Office space usage data is key to creating a flexible workplace that attracts and retains top talent.
- The best way to approach the uncertain future of the workplace is to build flexibility into work models and office spaces.
The current state of GSA offices
Approximately 2 million employees are working in GSA offices, and the pandemic impacted them all differently based on their job functions. Vital agencies such as FEMA never went to a work-from-home model. Instead, they reduced office density by adding shifts and keeping occupancy levels around 50%. On the other end of the spectrum, agencies with functions that suit remote work dropped to below 10% occupancy.
Recognizing the potential of hybrid work
The pandemic wasn't the first catalyst that made the federal government recognize many agencies can work well remotely. Peck says that in 2011, a winter storm in the DC area prompted a snow day that affected about 300,000 people.
"Suddenly, people realized that most work gets done via email. The government didn't really shut down on snow days like it used to. That was the impetus for a lot of us to start saying, 'Something's happening in the workplace.' [Work] doesn't happen in the office so much. It can happen in other places," Peck says. "We all talk about the pandemic as if it's this cataclysmic change in the way office happens, and yet, it really just accelerated trends that we saw before."
"We all talk about the pandemic as if it's this cataclysmic change in the way office happens, and yet, it really just accelerated trends that we saw before."
While the federal government was aware of the potential of hybrid and remote work long before COVID-19, the pandemic was the inciting incident that forced them to invest in the mobile technology required to make it a reality.
"During COVID, it forced agencies to buy mobile technology. When I was at GSA, we were literally buying tens of thousands of laptops and mobile devices every month at the beginning of the pandemic. They were for agencies that had desktop computers and file cabinets and a bunch of paper, and they couldn't get anything done," Mathews says. "A massive investment has been made in the ability to do remote work."
On the new role of the office
With companies worldwide embracing hybrid work, what purpose will the office serve?
"All of the surveying that everybody does indicates that people miss a couple of things about being in the office. But only a couple of things," Peck says. One of those things is the opportunity to collaborate face to face. "We see the office space being more centered around meeting space and options for meetings."
Mathews says, "Physical space is still really important to organizations. It's going to vary in time and place and by function, but it's important. Even an all-remote company needs a place to get together."
"Even an all-remote company needs a place to get together."
In addition to being a place to collaborate, the office will also provide a way for employees to build trusting relationships with colleagues and develop a positive work culture. "I think it's quite clear that organizations want their people to have some physical tie [to the company] and an opportunity to get together. That creates engagement better than just having Zoom calls with your colleagues," Peck says.
Given the changing expectations of employees, Mathews says there's "massive uncertainty" about what the demand for the office will look like five years from now. "I think everyone can say the demand is going to be less. It's hard to say exactly how much less and where it will be less, but the portfolio is too big now."
Despite the uncertainty, Mathews is optimistic about the future of the workplace. "I think the future is bright. It will be smaller, but nicer."
Why consolidating office space is expensive
Now that federal agencies are on board with hybrid work, they're left with a daunting question. What happens to all of that unused office space? Peck says the answer lies in consolidating office buildings to better serve the new model of work. Office buildings need to be more open and flexible, with reconfigurable spaces that encourage collaboration rather than solo work.
Doing this will require an enormous amount of funding.
As Peck says, "Renovating a government building can be $400 a square foot. The government has security and energy requirements that drive the cost up." When he mentioned the price of consolidation, one government representative said, 'Tell Peck to shove the desks together.'
Of course, it isn't that simple. Creating open spaces requires taking down walls, installing new ductwork, updating plumbing, and much more. "GSA can't get anywhere close to the capital it needs to renovate its office buildings," Mathews says.
Is the cost of updating offices worth it?
Mathews and Peck have ample experience to help them make educated workplace predictions, but there's no way to know for sure. Given the uncertainty, it's reasonable to question whether investing any money into new, consolidated or renovated office real estate is a smart choice.
Mathews believes it is. He shared a revelation he had when touring the Bloomberg London office building, a modern workspace focused on collaborative, reconfigurable spaces and sustainability. He says the cost per square foot was obviously high because it's a "spectacular" building, but when he did the math, he realized the Bloomberg building "costs less per person than GSA was spending to house the typical federal employee."
This is a significant realization, especially when you consider that most federal employees work in outdated buildings without the flexibility or amenities that Bloomberg London offers.
"Bloomberg is a data company. They had developed their systems internally that allowed them to have such rich information about how the building was utilized," Mathews explains. "It was built in a very flexible way. They can see what parts of the building are underutilized or overutilized, and they can quickly reconfigure to create more of what is in demand and less of what isn't."
Bloomberg's investment in a state-of-the-art office building pays off by attracting and retaining the top talent they're after. Mathews says recruiting tech talent is "a really important issue and a big challenge for the federal government," considering the cyber threats they face. To win potential employees over, the federal government has to rethink its approach to office buildings.
Peck touches on the importance of high-quality office spaces to the workforce: "Real estate is not just math. There's an emotional response. You walk into some federal buildings, and your heart sinks. And, quite honestly, you don't want a workforce where they walk into the office, and their hearts sink."
Approaching the uncertain future of work
Almost 90 million square feet of GSA office real estate is up for renewal within the next five years. Deciding how long to renew leases is a challenge since no one knows what the future of work holds.
"Uncertainty really is what we're staring at for the near term, and probably for several years going forward, as far as what the demand is going to look like. And the solution to uncertainty is flexibility."
"There may be totally different ways of working three years from now, and if you're building out space right now, you have to figure out a way to make it as flexible as possible so that it can adapt," Peck says. "Real estate isn't like widgets or an iPhone. You can't come out with a new model every year."
Mathews agrees, saying, "Uncertainty really is what we're staring at for the near term, and probably for several years going forward, as far as what the demand is going to look like. And the solution to uncertainty is flexibility."