Major corporations are rethinking their office space needs in light of the novel coronavirus — decisions that could have lasting consequences for people and the planet.
What the white-collar world looks like on the other side of the COVID-19 pandemic will be shaped by how long the crisis lasts, with some companies eager to get workers back to redesigned offices and others using the pandemic to overhaul their approach to collaborative workspaces, according to real estate and sustainability experts.
But two things are already certain, they say: Offices have to change, and there will be fewer of them. While that could seem like a plus for corporate sustainability efforts, it will make tracking those pledges more difficult.
To keep workers at least 6 feet from one another and promote social distancing, "those spaces need to be reconfigured," said Clinton Moloney, a regional managing director at Engie Impact, a sustainability firm that consults with 25% of the Fortune 500 companies.
Businesses eager to reopen their offices should ensure their workspaces have surfaces that are easy to clean, effective ventilation and fewer small meeting rooms, experts told E&E News. And the U.S. Green Building Council announced yesterday that the sustainable architecture group plans to update its popular LEED certification program to reward such measures.
That’s because COVID-19 can spread when an infected person coughs or sneezes, emitting droplets with the coronavirus. Healthy people can get the potentially deadly disease by inhaling droplets or aerosols from a COVID-19 carrier or by touching a surface where the coronavirus has settled and then touching their mouth or nose.
But companies in some industries and regions are thinking bigger than how to make offices safer to work in during and after this crisis — and in any future pandemics.
"A lot of our clients are a lot more interested in the strategic opportunity that this provides," said Diane Rogers, a senior strategist at IA Interior Architects, a San Francisco-based design firm.
Those companies are asking, "Is the office really still going to be used the way we’ve typically used an office, as primarily workspace with some meeting space attached to it, or will it become something completely different?" she said. "So we do see some clients say, ‘We’re willing to take our time going back into the office in order to think through exactly how we want to handle our portfolio of real estate.’"
Visa Inc. is one major firm that’s reconsidering its global operations.
"The spread of COVID-19 has caused us to modify our business practices," the credit card company said last week in a securities filing. That included steps to restrict employee travel; develop social distancing plans; and avoid in-person meetings, events and conferences.
"We may take further actions as may be required by government authorities or as we determine are in the best interests of our employees, customers and business partners," Visa said.
The coronavirus has also prompted technology giants Google and Facebook Inc. to tell employees they won’t have to return to the office until at least 2021, Bloomberg reported on Friday.
Redesigning workspaces may not be enough to coax all white-collar workers back to the office, especially if it takes many months or years to find a cure or effective treatment for COVID-19.
In such a worst-case scenario, companies in New York City, Los Angeles, Chicago and other hard-hit U.S. cities could move their operations to the suburbs or shrink their office footprints.
"We won’t need as much office space, and we might need it located in different places," said Moloney of Engie Impact. "We could well see a glut of office space in downtown locations, and that will definitely be disruptive."
Some major tenants have already put their landlords on notice.
Morgan Stanley will have "much less real estate," James Gorman, the bank’s CEO, told Bloomberg Television last month. Morgan Stanley leases close to 3 million square feet of office space in New York City alone, according to CompStak, a real estate data company.
Moody’s Analytics predicts that nationwide office vacancies will hit 19.4% by the end of 2020. It’s never been that high in the U.S.
"Even if economic recovery ensues by later this year, reopening efforts might not go as smoothly — and office vacancies are likely to keep rising through 2022, topping out at 20.2%," the market research firm said in an analysis earlier this month.
City centers are likely to bear the brunt of office vacancies, according to Moody’s.
"Businesses may choose to lease space in nearby suburbs, not too far from their original [central business district] base," the analysis said. "This minimizes disruptions like having to deal with employee relocation costs (if the choice of suburban space, for example, is less than 25 miles away from the original CBD location), and may translate to savings in rental costs given that suburban office space tends to be cheaper than CBD options."
"People will be much less interested in density and being in cities if they can’t ride the subways and they can’t take an elevator. And if oil is cheap, they can drive," said John Macomber, a finance professor at Harvard Business School. "So it would be a kind of anti-sustainability outcome, but it’d be one that is pragmatic."
Corporations that are committed to sustainability may need to think about how such outcomes could impact their environmental commitments, experts said.
For instance, Engie Impact is conducting a pilot project with its employees to see how their home energy use and personal transportation emissions have changed during the pandemic. The company hopes to use that and other data to create models its clients can use to estimate and offset the environmental impacts of their homebound workers.
"Companies are going to need to refresh their sustainability goals" to account for the more decentralized nature of their operations and the resulting carbon dioxide emissions, said Moloney of Engie Impact. "How do you drive that carbon footprint down when you still may not have a very good handle on what that footprint is?"
