Contagion: Changes in Office Space and Business Travel Markets

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This pandemic will eventually pass.  We are vaccinating people and look to sometime in 2021 to return to some kind of normal.  Will it be the normal we know, or will it be a “new normal,” dusting off the phrase that was popularized during the Great Recession?

Many people are working from home and doing it pretty effectively.  Cloud based collaboration applications and video conferencing tools like MS Teams and Zoom have made the transition kind of quick and kind of seamless.  Some of us have it easier than others.  It is better if one has a home office with a setup that includes a larger monitor or dual monitors.  It is easier if one doesn’t have school aged children learning at home and requiring some amount of managing and monitoring.  But, it is doable.  Many businesses are in fact doing it quite well.

It has been a while since I worked in an office; almost ten years.  I recall many mid-level managers to senior executives wanting their people to come to work.  They wanted them in the office during business hours.  They were, in general, hesitant to let folks “work from home” simply for a lack of trust.  It is easier to keep an eye on them when they were on-site.  An occasional walk around the office gave a warm feeling of folks hard at work.  But let’s be honest, shopping online and working on spreadsheet or ERP system has the same look and feel about it and office workers are fairly skilled at shifting from Amazon browsing to a spreadsheet when they see the boss. 

The true measure is really whether the work was getting done.  Was it getting done on time or sooner?  Was the quality adequate or superb?  Taking “work time” to shop on Amazon for 15 minutes or 30 minutes actually allows folks to work longer as they don’t have to watch the clock and leave, consuming more time, to do physical shopping. 

Anyone that ever travelled a lot for their job and was remotely effective knew very well that venue doesn’t matter.  Have laptop and wifi, work from done from anywhere in the world.

The pandemic hammered this fact home.  Zoom, MS Teams, and even Google Hangouts provide a virtual office connectivity that makes all this work even better.  Files are shared and worked on collaboratively.  There is built-in texting and video conferencing in these applications that we have all gotten very good using and navigating between them as needed.  We are sharing screens and presenting.  Cell phones are almost unnecessary except for texting colleagues in a conference call to either caucus or complain.

There are a couple of questions to consider about white collar work life after the pandemic.  One, will we need the same amount of office space as pre-pandemic?  And two, will business travel return to pre-pandemic levels?  I say no in both cases.  This does not mark the end of offices and business travel by any means.  But, there is so much money and time to be saved, I believe businesses will take advantage of it.

Why commute to the office?  Save that one to two hours a day and work longer.  More productivity for the same number of hours.  Offices could be downsized depending on how many workers can and would want to telecommute.  Office space could be reconfigured to assign different workspaces to employees who infrequently come into the office.  The savings could be considerable as could the impact on traffic and energy consumption.

Why spend hundreds to thousands of dollars to travel across the country or world for a business review or meeting?  We have proven this can effectively be done via Zoom and MS Teams.  The travel will not go away entirely, however.  In mergers and acquisitions, operations, IT, sales, and other functional areas, there will still be the need to walk the floor of factories, build relationships, finalize deals, and such where being face-to-face meeting and working may be more effective. 

Of course, this does not apply to all people and jobs.  Some will want the change of venue from home to office.  Some will want to alternate between home and office as business priorities require.  Some jobs simply require all workers to be on-site e.g. managing factories and distribution centers.

I imagine the commercial office space market which has shrunk, will be smaller once the pandemic ends.   I imagine that business travel, which has really diminished, will come back a bit though nowhere near the pre-pandemic days.  My guess, and it is just a guess, is the commercial office space market will take less of a hit than the business travel.

In either case, it will be a “new normal.”