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More space or less space. The state of the workplace.

August 17, 2021

More space or less space. The state of the workplace.

August 17, 2021
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Despite the reopening of countless office spaces, many remote employees will remain just that—remote (1).

With this increase of remote workers comes a decrease in the need for physical workspace. Many companies will downsize their footprints significantly, causing a painful ripple through well-known commercial city areas.

But that is not always the case.

In an almost paradoxical display amid the signs of an enduring hybrid-work landscape, many of the most desirable Big Tech employers are putting billions of dollars into expanding their portfolios, making elaborate plans for large campuses (2).

The reasons for some companies' downsizing are the very same reasons for others' expansion.

While some of the reasons behind this discrepancy align neatly with company policy and data predictions, others reveal a more complex reality in the growing and shifting workforce of the future.

The office gets smaller

Companies are making important space decisions as they manage the effects COVID has had on how and where their employees work.

Reduced office space is one of the materializing trends (or perhaps de-materializing) for recognizable brands like Ford, Salesforce, and Target Corp (3).

The reason is often straightforward—the pandemic proved that remote work does not negatively impact employee efficacy. Fewer people in the office can mean less office space.

One study showed that 94% of employers found productivity the same, if not higher, after transitioning to remote work during COVID, with 83% planning to continue a hybrid schedule indefinitely (4).

As a result, around half of large and small corporations plan to reduce their footprint (5).

For companies that foresee their employees staying remote, reducing the overhead of physical offices makes sense.

In many ways, this trend is spurred on by the employees themselves, who have gotten used to remote work and don't want to return to the office. A recent poll showed that 40% of people would rather quit than go back to full-time work (6).

This explains why many companies may seek smaller footprints in the immediate future. But the dynamic it creates can be one of friction and competition. Companies who want employees returning to the office need to find innovative ways to make it happen while competing for talent among hybrid and remote-friendly companies (7).

Nevertheless, there's logic to reducing space and encouraging employees back into the office. This has to do with a new approach to floor plans. By creating more open workspaces where hot-desking and unassigned seating promote collaboration and intraoffice morale, more people can fit into smaller spaces (8).

As concerns over social distancing still weigh heavily on in-office decisions, smaller offices with shared workspace may seem risky. But, because many of these offices are also employing staggered schedules and allowing a hybrid work model, many believe it can be the best of both worlds: safe and effective.

Big Tech expands

To understand why companies are expanding in the face of a remote-focused future, first keep in mind the rapidly changing work policies responding to the uncertainty of the pandemic.

Tech giants like Apple, Facebook, and Google all had plans to bring employees back to the office as early as September. But as the Delta variant surges, those return-to-office plans were forced to change (9).

Office-centric cultures

For companies with long-term goals to become more "office-centric," portfolio decisions need to see past the current issues and into a COVID-free future. Moreover, many of these companies are drastically increasing their workforce (Facebook growing by 13,000, Google 16,000, and Amazon by 3,500), so it stands to reason that bigger offices are needed to accommodate new employees (10).

Collaboration and innovation

For companies that put a premium on collaboration and innovation, having employees together in the same space creates an environment where new and cutting-edge ideas can bloom. As Sundar Pichai of Alphabet wrote in a recent email to employees, "In-office collaboration will be just as important to Google's future as it's been to our past" (11).

In-office collaboration will be just as important to Google's future as it's been to our past. Google CEO Sundar Pichai

The underlying question here is that although many jobs can be done productively with employees working from home, what immeasurable metrics of creativity may be lost?

Although there is not yet any data for this, it seems that Big Tech feels it's substantial. You can see this in the attention to workspaces being implemented in the new and expanded campuses.

What complicates things is that the reasons for some companies' downsizing are the very same reasons for others' expansion.

Julie Whelan, CBRE's Global Head of Occupier Research explains, "Many companies now recasting the design and function of their offices will find that the square footage needed to accommodate team-centric work, free-address seating and meeting space often exceeds that previously dedicated to rows of individual offices and cubicles" (12).

Not to mention the perilous predictions some have for unassigned seating in a pandemic (13). That means that the strategies of hot-desking that some believe call for smaller offices may be responsible for creating larger, more collaborative, and socially distanced workspaces.

Which is right for you?

The obvious next question is which decision is right? Or are there more complicated implications worth investigating?

Another way to look at it could be like this. While the pandemic was devastating for many businesses, it was quite profitable for Big Tech (14). Many Big Teach companies have the capital to grow while others don't. As a result, developing inviting and elaborate offices is a viable solution they can afford.

Big Tech companies can invest in critical geographic areas, keeping their offices in burgeoning (but expensive) places like Silicon Valley while being close to their worker base. In reality, many had plans to grow long before the pandemic, so the recent proposals are just extensions of delayed momentum.

Furthermore, these new offices can offer all-inclusive facilities that make the office a more desirable place to be. They'll feature home-style amenities like free meals and napping pods—a wise solution to hiring competition that simultaneously provides incentives for employees to come to work and do what they are paid to do: pioneer.

While you may not have the same resources as global tech brands, you can still follow a similar playbook. After all, in a hybrid world where working from home is a desirable norm, is the future, in a certain way, not a seamless work-life blend?

  1. Forbes. (December 2020). This Is the Future Of Remote Work In 2021.https://www.forbes.com/sites/carolinecastrillon/2021/12/27/this-is-the-future-of-remote-work-in-2021/?sh=63578a9b1e1d
  2. New York Times. (November 2020). Manhattan Emptied Out During the Pandemic. But Big Tech Is Moving In. https://www.nytimes.com/2020/10/13/nyregion/big-tech-nyc-office-space.html
  3. Chicago Tribune. (March 2021). Ford Motor Co. tells 30,000 employees they can work from home indefinitely. https://www.chicagotribune.com/business/ct-biz-ford-motor-work-from-home-20210317-7dtnwjehebggnkpkm7utugwqoa-story.html
  4. SHRM. (September 2020). Study Finds Productivity Not Deterred by Shift to Remote Work. https://www.shrm.org/hr-today/news/hr-news/pages/study-productivity-shift-remote-work-covid-coronavirus.aspx
  5. Bloomberg. (October 2020). Companies To Shrink Offices As Work Stays Remote After Pandemic. https://www.bloomberg.com/news/articles/2020-10-06/companies-to-shrink-offices-as-work-stays-remote-after-pandemic
  6. Business Insider. (June 2021). Nearly 40% of workers would consider quitting if their bosses made them return to the office full time, a new survey shows. https://www.businessinsider.com/quit-job-flexible-remote-working-from-home-return-to-office-2021-6
  7. Washington Post. (June 2021). As offices open back up, not all tech companies are sold on a remote future. https://www.washingtonpost.com/technology/2021/06/04/big-tech-office-openings/
  8. WeWork. (March 2021). What is hot-desking and what are the benefits? https://www.wework.com/ideas/workspace-solutions/flexible-products/what-is-hot-desking
  9. CNBC. (July 2021). Companies are already pushing their return-to-office dates to 2022—why some experts say it's a 'smart approach.' https://www.cnbc.com/2021/07/30/companies-are-already-pushing-their-return-to-office-plans-to-2022.html  
  10. Wired. (February 2021). If Work Is Going Remote, Why Is Big Tech Still Building? https://www.wired.com/story/work-going-remote-why-big-tech-building/
  11. CNBC. (December 2020). Google CEO delays office return to next September, but axes idea of permanent remote work. https://www.cnbc.com/2020/12/14/google-ceo-email-delays-return-to-sept-2021-no-permanent-remote-work.html  
  12. Globe St. (June 2021). New Data Show Few Companies Will Dramatically Reduce Office Footprint.https://www.globest.com/2021/06/11/new-data-show-few-companies-will-dramatically-reduce-office-footprint/
  13. Bloomberg. (September 2020). Hot-Desking Is a Good Way to Lose Your Best Staff. https://www.bloomberg.com/opinion/articles/2020-09-29/coronavirus-why-shrinking-offices-and-hot-desking-are-bad-ideas
  14. WSJ. (October 2020). Big Tech Companies Reap Gains as Covid-19 Fuels Shift in Demand. https://www.wsj.com/articles/amazon-sales-surge-amid-pandemic-driven-online-shopping-11604003107

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