The COVID-19 outbreak has forced numerous companies to let employees work remotely if possible, but what was meant to be a temporary situation could be more permanent for some businesses, according to CNBC. Recent reports say that major companies like food retailer Mondelez, Nationwide and Barclays are considering permanent shifts to remote work and reduced office space.
As more businesses are operating remotely amid stay-at-home orders, company leaders are seeing that productivity has not dipped, leading many to think employees don’t need to be in the actual office to accomplish their assignments. Having remote staffs could help companies cut costs, which may be necessary if the economy continues to suffer.
Nationwide recently moved past considering more work-from-home positions and has put a hybrid work model in place, according to CNBC. The insurer will operate in its four main corporate offices in Ohio, Des Moines, Iowa; Scottsdale, AZ and San Antonio. Employees at most Nationwide’s other locations will continue to work remotely. Nationwide plans on exiting all other locations by November 1.
“We’ve been investing in our technological capabilities for years, and those investments really paid off when we needed to transition quickly to a 98 percent work-from-home model,” Nationwide CEO Kirt Walker said in a statement. “Our associates and our technology team have proven to us that we can serve our members and partners with extraordinary care with a large portion of our team working from home.”
Meanwhile, Mondelez CEO Dirk Van De Put said during a recent earnings call the company is making adjustments to navigate a recession more easily—including rethinking where employees work.
“Maybe we don’t need all the offices that we currently have around the world,” De Put said. “So there is a major effort going, taking place as it relates to the costs in the business.”
Remote work makes connectivity more important than ever
In a traditional work environment colleagues can get up and go to someone’s office or desk if they need to discuss something. That face-to-face interaction is not an option when entire offices are working from home. All interactions must be done through email, phone and video conferencing, which has become increasingly more popular during the pandemic. Those communication platforms all share a common thread—they require strong connectivity. This is especially true for video conferencing platforms like Zoom—the last thing anyone wants is lot of buffering or slow downs during an important business-related video chat.
If some companies implement a partial remote work policy like Nationwide, it’s likely the employees who return to the office will bring some of the communication tools they used while working at home with them. In that instance, it will be up to commercial real estate owners to ensure their building’s connection is strong as more video conferencing is going to take place.
What the potential work from home trend means for CRE
Companies opting to have their employees work remotely on a permanent basis could spell trouble for commercial real estate owners if tenants need to break their leases. Commercial property dropped 1.3 percent in March, according to Green Street’s Commercial Property Price Index and co-working space provider WeWork recently didn’t pay some of its rents. Meanwhile, apparel retailer J.C. Penney is considering bankruptcy and Gap stopped paying rents last month.
On a more positive note, some property managers and designers are looking at how to design future office spaces. It’s expected that building layouts will be done to prevent the spread of germs and seating arrangements will look much different. Open floor plans that were once on the rise will likely take a backseat to traditional cubicles and offices.
Meanwhile, new technology could allow employees to enter conference rooms and elevators without having to touch doorknobs or press buttons. It will be critical for CRE owners to make sure they have solid connectivity in their buildings if businesses decided to move in this direction. It will be a tough enough of a sell to convince tenants to lease space, or maintain their current lease, in their buildings when the remote work option is so appealing. A reliable wireless network could be all that stands between a tenant deciding to operate out of a physical office or joining the other businesses who are breaking tradition and staying at home even after health crisis is over.