Getting Clarity on the Next Generation of Office Space, Part 1

Guest Post by Nathan Lentz, DPR Construction Special Services Group leader

From nearly the moment states issued their first stay-at-home orders in March 2020, there has been a robust discussion in commercial real estate circles about how a global pandemic would affect the workplace. Headlines featured hyperbole; you could open the same email newsletter and see a piece proclaiming the death of the office followed up by one asserting that the office environment would be more important than ever.

What’s a building owner, tenant or developer to do? Unsurprisingly, the initial answer was “not much.” Across the sector, work either carried on as originally planned or project owners took a wait-and-see approach. After all, why spend six or seven figures on a tenant improvement when it feels like everything you’ve ever known about office space is changing?

As the pandemic approached its anniversary, behind all the news of case rates and politics, real science had created some level of certainty. Natural ventilation and outdoor settings offered significantly lower risk of disease transmission. Vaccines fulfilled the early promise they showed and a rollout that made them widely available in the United States helped show there was a path forward.

This meant, at last, it would be possible to determine what was next for office space. DPR Construction consulted with several industry partners – IA Interior Architects, JLL, Savills and STG Design – and gathered input from each group’s experiences over the past year.

The outcome, Getting Clarity: The Next Generation of Office Space, paints a picture that, while there is no silver bullet solution, certain factors will lead considerations for individual projects.

Office occupants and their need to feel that they’re working in a safe, healthy environment is rightfully one of the first considerations. Regardless of location, office leaders must assess a few factors:

• Safety – Can people access the space safely and do they feel safe in the space? Perception may matter more than reality.
• Access – Is the space easy to access while maintaining social distancing protocols? What are the commuting patterns and challenges? The need for physical distancing may come up yet again, either from this pandemic or a future disruption.
• Productivity – How is productivity affected working in an office vs. working from home? What are the advantages and disadvantages of both? How do they vary by job function?
• Home Life – What does life look like at home when caring for children or elderly, or navigating other family members’ schedules and needs who are living in the household? While the office may return to “normal,” we cannot assume that people’s lives at home are the same as before the pandemic.

People considerations are paramount. From there, one of the biggest factors that will affect the near-term of design, construction and renovation of office spaces is something often taken for granted: time remaining on leases.

A office tenant that has been paying rent for a mostly-empty space for more than a year and only has 12-18 months left on a lease is much more likely to look at quick, less expensive upgrades and focus more on what the next office space experience will be. That said, looking at quick-to-deploy, lower cost things like the use of ground level outdoor spaces, flexible workstations and equipping more of the existing floorplan to handle work are within reach.

Those with soon-to-lapse leases will have some of the best leverage they’ve likely ever had in negotiating new agreements in new spaces.

Those in longer leases, though, will be the ones paving the way to what the true next-gen office looks like, investing considerable resources to address the health and safety of their occupants as well as building in resiliency so that, should another disruption occur, the office won’t be simply a red number on the balance sheet. A forthcoming blog will focus on these strategies and how they will affect design and construction.