John Ward is the Chief Investment Officer of Bridge Investment Group’s Office Division and a Principal at Bridge Commercial Real Estate.
As we move into the spring months, we’re primed for a big return by workers to office buildings across the country. While we’re seeing this in some markets more than others, especially the Sunbelt, there is a new differentiator that will decide which office campuses will thrive post-pandemic. Companies are shifting their operations back in-office, but are their employees returning with them?
The Great Resignation, a term coined by a professor at Texas A&M University, has caused tens of millions of Americans to quit their jobs throughout the pandemic, with reasons ranging from low pay or no schedule flexibility to changing careers or retiring from the workforce altogether. Corporate real estate heads and office landlords who want to remain relevant must take heed of the lessons from this phenomenon that is playing out in real time. Quite simply, you have to provide elements and experiences that will draw people out from the creature comforts of home to create an atmosphere that is better than anything those workers may have in their work-from-home environment. Employees have the leverage right now, so employers and landlords must adapt accordingly by providing a better product.
What will allow companies and their office buildings to not just survive but thrive is the idea of the “connected office.” What the pandemic has revealed to many of us is that we crave to be part of something bigger than just ourselves, working in our cubicles.
So, what is the “connected office”? From what I’ve seen and heard, employees no longer feel motivated by just showing up for their jobs at 8 a.m. and leaving by 5 p.m.—they want to be part of the larger surrounding community, whether that be their office community or serving charitable organizations in the area alongside their colleagues. This increased community awareness has forced office owners to look for more ways to engage their tenants beyond the traditional and generic “canned goods” collection drives that lack the elements of human connection and authenticity today’s workforce craves.
Health and wellness are other key pillars of the “connected office” experience. At Bridge, our property management teams have been hard at work upgrading our building systems to receive the WELL Health-Safety Rating for 55 of our office properties across the United States. This seal signifies a commitment to creating people-first places that support the health and safety of employees, tenants and visitors, while being good stewards of the surrounding environments. Office owners should be committed to the well-being of their tenants and act with their best interests in mind, through certifications such as WELL, LEED or Fitwel to help ease employee anxiety during reentry.
Why should landlords care?
With the “connected office” model, tenants are also looking for landlords to go outside the walls of the building, with amenities such as walkability, greenspace, access to external amenities like dining and shopping options, and participation in give-back or charitable events. The No. 1 request we hear from our tenants is walkability outside the building and amenitization on the inside, so their office is a true destination where workers want to be, even if they are given a hybrid work model. These social touchpoints support connectivity and inspiration and help create a thriving office ecosystem. Paired with the Great Resignation, the “connected office” strengthens aspects that can be especially attractive to future talent and retain current employees, which benefits all users of an office building.
Property managers should also provide in-person or digital programming to get their tenants out of their offices and inspire collaboration in shared spaces, such as tenant lounges and breakout rooms. Landlords who make an extra effort to create connectivity and synergy within their buildings can contribute to the overall financial and personal health of their people. Throughout the pandemic, many owners have implemented capital improvements that add to the physical connectivity of a building, from walking trails to expanded tenant activity areas.
How will it shape the future of the office?
Not only are employers and tenants looking for connectivity between each other and the hyperlocal community, but with the building itself. Upgrades in property technology can allow users access controls using only their phone. Apps such as SwiftConnect, an office building software platform, allow users to digitize their buildings and give tenants access to temporary spaces throughout the country. These technologies are always evolving, and many are finding their homes in flex space, which blends a traditional office model with the flexibility of modern coworking.
Flexible space is also key. From large companies to smaller startups, flex office can cater to any size tenant’s needs and offers agility and attractive amenities. JLL’s report, “The future of flex,” found that owner-operator platforms and management agreements will continue to increase, and plug-and-play solutions will be in high demand. What was once a miniscule facet of the overall commercial real estate market is set to become a mainstream element of the industry as previously dominant coworking models by independent operators like WeWork now give way to landlord-driven, in-house brands. Leading players are now offering flex office programs. A report from CBRE found that, in their respective markets, 40% of office properties with flexible workspace achieved higher values than the average for office buildings.
The future of the office is the “connected office” model, and landlords must play a part in the health and well-being of their space and the people who use it daily. When office owners implement tenant engagement campaigns, foster opportunities for on-the-ground community service, upgrade their building technologies and provide flexible work arrangements, the “connected office” ecosystem creates a place where everyone wants to be, from property staff and onsite vendors to the C-suite and everyday employees. That future is now, and those who have the foresight to act first will be best positioned for the next chapter of change already underway.