Earlier this month, the national research group Kastle’s “Return To Office Barometer” measured office occupancy in the 10 major markets they survey – based on entry card swipes – as rising above 50% for the first time since the beginning of the pandemic.  So people are coming back to the office after all.  The predictions of the demise of the office have been greatly exaggerated, to paraphrase Mark Twain.  

There is no doubt though that hybrid work is here to stay – you cannot put that genie back in the bottle.  Even with visits to the office increasing, you still have large swaths of office space mostly empty and corporate leadership wringing their hands over wasted rent expenditures.  The problem will sort itself out over time as leases expire and companies downsize.  In the meantime, it is a very precarious time for office building owners.

There was much written about “flexible office” during the pandemic and I read many of these articles but they were always light on specifics.  So I wanted to cut through the high minded “blah blah” of the experts and describe in plain English what the office building of the not-too-distant future needs to look like in order to succeed.

At least 20% of building square footage must be converted into shared amenities that will be public (i.e. spacious gathering places, food and drink amenities), reserved (i.e. video conference rooms, training rooms) and co-working space (think WeWork).  The co-working space will continue to be home for new, small businesses that are in flux with respect to their growth.  In the future office building, they will also serve as overflow space for tenants with fixed office suites in the building and could even house entire functional teams within a company (i.e. accounting and finance).   There are two ways the economics could play out: either tenants will pay more per square foot of leased space or use of the amenities will be charged a la carte back to the tenants that use them. 

The concept is that simple. Modern buildings with state-of-the-art heating, air conditioning and ventilation systems will have a competitive advantage but even older buildings can be converted to allow companies to lease smaller private suites and pay as they go for the amenities.

A business – just like a family -- needs a physical place to call home.  It cannot thrive in virtual reality.