Tech Tenants Envision a Largely Remote Future
Now that many corporations have gone largely remote, and found that their workforce remains productive, the technology sector appears to be embracing the concept for the long-term.
In a new survey by Savills North America of several hundred technology office tenants, a staggering majority of firms, 94%, said they expect remote work, at least a few days a week, to be normalized at their company in a post-vaccine environment.
The survey comes amid daily news of tech companies making announcements of future, office-light plans. Microsoft last week announced that employees could permanently work from home, and this past July, Google extended its allowance of employees to work remotely until at least next summer.
These shifts are prompting changed expectations on the office footprints of tech firms, according to the Savills technology practice group’s survey. Covid-19 has impacted 64% of firms’ headcount growth projections. The good news is that just 8% of survey respondents said their headcount would likely decrease, while 36% said it would grow as projected and another 6% said it’d grow even faster than projected.
Also of note: while 59% of those surveyed said that, pre-Coronavirus, zero to 10% of their employees worked from home full-time, just 16% of respondents said that same amount of workers would do full-time remote work.
Still, companies are getting ready for a shift, with 55% of companies saying they expect to dispose of some portion of their office space in the next 12 to 18 months.
That dovetails with recent trends. Technology was one of the two top sectors to contribute sublease space to the Los Angeles market, which has increased by 20% in recent months, according to JLL. The sector has been responsible for 26% of the approximately 80 new or expanded subleases that were available as of last month, the brokerage firm’s report stated.
And while leasing by technology firms was off in the first half of the year, a bright future lies ahead, Colin Yasukochi, executive director of CBRE’s Tech Insights Center, recently told GlobeSt. “[The second quarter’s] decline in office leasing by tech companies is directly related to government-ordered shelter-in-place restrictions, business uncertainty, and the additional work-from-home flexibility that many tech companies are allowing their employees during the pandemic. That has led to the delay of many real estate leasing commitments until there is more clarity on growth prospects and any fundamental changes in how we use office space going forward.”
He continued, “We see employment growth going forward, especially since demand has increased for many tech services and products during the pandemic..,,Tech companies now expanding in growth markets had set their expansion plans in motion prior to the pandemic. They remain confident in their business prospects and the availability of tech talent to hire.”
Leasing in the third quarter, Yasukochi forecasted back in August, will likely rise, making the second quarter the nadir for 2020.
However the broader leasing patterns shake out, technology companies are anticipating big changes in their office configurations. Before Covid-19, 46% of Savills’ survey respondents had an entirely open office with benching or cubicles but, looking ahead, less than half of the group—22%—said that would be the case going forward. Another 33% predicted that they will create a “mostly” open office with some private offices, while 32% of the group admitted they’re still mulling over future office design.
“Honestly, the majority of our decisions are still in flux,” said a Washington, DC-based survey respondent to Savills. “We love having office space to collaborate; however, our company has been operating wonderfully remote and feel it’s irresponsible to bring people back in given the nature of our work until risk is all but eliminated.”