Labor Day — the national holiday honoring hard working people — was the date on the calendar circled by many companies signaling the mass return to the traditional office environment and the symbolic end of the pandemic. Rising COVID-19 cases fueled by the Delta variant and vaccination breakthrough cases have now pushed this move-in date into the uncertain future. This creates additional time for companies to further evaluate their office space needs and configurations.

Several real estate professionals gave their perspectives on the topic during a recent webinar sponsored by Institutional Real Estate, Inc. (IREI) entitled “What do tenants want?”   

“Tenants are people, and people want to be heard,” said Kelly Ennis, Founder and Managing Principal of The Verve Partnership, a Baltimore-based group that designs workspaces driven by brand, space and culture. “They want flexibility combined with structure, camaraderie with collaboration, and ultimately want to feel safe given the current state of the pandemic. This comes with balancing trust, respect, communication, and organizational policies that align with physical space and it is 100% possible to achieve this by creating a relevant workplace strategy.”

Flexibility, amenities and ‘me space’

“The reasons why companies need office space hasn’t changed since the start of the pandemic, which is led by the desire for employee collaboration, seeing projects to completion and establishing a corporate culture that is embraced by all,” explained Doug Schwartz, CIO for JP Morgan Wealth Management. “But the fact remains that the amount of office space per worker has shrunk more than 30% over past 20 years, particularly recently with the popularity of collaborative workspaces.”

“What employees want from their office has significantly changed and, due to the competition for talent, workers are increasingly empowered,” states Tyson Skillings, Managing Partner for Rockwood Capital. “They are asking for increased location flexibility and, while working at the office, more ‘me space’ as compared to ‘we space’. The trend is for the reverse of densification and less hot desking. The main reason companies want office space is to maximize profits for its different stakeholders and, to accomplish that, organizations need to attract and retain the best talent. Offering the most attractive office environment is a significant differentiator when it comes to talent retention.”

Shifting office-space preferences are placing new responsibilities on both employers and building owners.    

“Pre-COVID, we began investing more heavily in adding amenities to spaces and this will be a continued point of emphasis for the foreseeable future,” said Jonathan Ross, Head of International Real Estate, Midgal Group Insurance and Finance. “The burden used to be on the tenant to create communal meeting rooms and collaborative spaces, but now the landlords are taking that on. Amenities are physical, technological and social with event programming and happy hours. Basically, landlords are doing everything they can to make its buildings more attractive and better compete in the marketplace.”

Changes in building design

“Employees are demanding changes in building design and office flow and they are getting it,” Schwartz added. “Stairwells are being created that don’t lead to every floor, which establishes suite identity and direct access. The quality of glass gets better every year and, by allowing additional light to enter the building, different floorplates can be accomplished. The use of wireless technology eliminates the need for hard wiring and also makes office design increasingly flexible.”

“The quality of building air is on everyone’s minds,” added Skillings. “This is especially prevalent among antiquated buildings constructed in the 1980s, with conversions being difficult. Landlords are facing constraints with existing ceiling heights, outdated windows and old HVAC systems. Each of these items need to be addressed. People generally think that every obsolete building makes a great life sciences play with a new conversion.”   

“We spend more than 90% of our time indoors, yet we rarely stop to think about how indoor air is affecting our health,” stated Martin G. Knott Jr., President of A.I.R LLC Advanced Indoor Resources in Baltimore. “The pandemic has changed that forever and landlords, business owners and the workforce are all trying to figure out how to make people feel safe inside of buildings.

“The good news is every building, old and new, can be retrofitted to manage and deliver high quality indoor air. It’s a science project because every building is different. Healthy indoor air is determined by having the proper levels of humidity, Co2 and the temperature throughout the building. The work which will take decades is underway and these important elements of indoor air will be monitored and managed in all buildings going forward.”

“The quality of a building’s air is now starting to emerge on preliminary lease proposals,” Schwartz adds.

“Health and wellness issues are the great differentiators when companies began their office space search, and employees are looking for high quality air and natural light,” stated Ross. “Studies show that both contributes to higher employee productivity.”

Speakers stressed that the past 18 months have made the hybrid work model a “definitive trend in the future” and noted that employers are trending towards signing shorter term leases as they wait to see how the economy and work culture evolve.