Why Companies Are Shifting Away from Remote Work

FROM PANDEMIC PIVOT TO OFFICE REVIVAL

The onset of the COVID-19 pandemic marked a turning point for the traditional office workspace. As governments worldwide imposed lockdowns to curb the spread of the virus, businesses were compelled to adapt rapidly to remote work. Some companies opted to become fully remote with no office space at all. Others offered employees the choice to work from home permanently. 

The pandemic created an unplanned experiment for the global workforce, but with the quick adoption of remote work schedules, companies stayed afloat during uncertain times. And this shift unknowingly laid the groundwork for a new take on the traditional workday.

When lockdowns lifted, hybrid work schedules were widely adopted, blending days at home with days in the office. Health concerns persisted, helping hybrid schedules to take hold and evolve into a broader movement. This change in where and how people work impacted the nature of the workday and how employees interact with one another and company leaders. 

But four years after the onset of the pandemic, a new trend is gaining momentum: companies are returning to full-time office work. The pendulum is swinging back. The shift is a departure from remote work schedules that lasted beyond the various waves of the pandemic. But why now? It's been reported that many businesses witnessed a drop in worker productivity and company performance, leading them to reconsider the benefits of a centralized workspace. 

Driven by a need to reignite in-person collaboration, increase productivity, and solidify company culture, many CEOs are marching with their office leasing broker to find office space again. This new trend reflects a growing consensus among business leaders that, despite the cost savings of not having to pay office rent, having a physical office space fosters innovation and spontaneous interactions among employees and gives, in turn, these companies a competitive edge over their competition. The modern office space is a knowledge center that can provide a company with a leg up.

An investment in knowledge pays the best interest.

Top business leaders recognize that being physically present in the office is better for business. Could your company boost efficiency and discover untapped potential by uniting the workforce under one roof? 

THE REMOTE WORK EXPERIMENT

The sudden onset of the pandemic made working from home essential. With restrictions in place, the only choice companies had was to enable employees to work remotely or not work at all. Once Pandora's box opened, it upended the traditional office model and, in the process, revealed benefits that many office workers valued. 

1. Work-Life Balance: Working from home gave employees more flexibility over their schedules, making it easier to balance their workload with their personal lives. Now, they could file their "TPS reports" while doing a load of laundry, supervising the kids, and watching The Today Show. 

2. No Commute: This is a biggy. Forget about the subway; it only takes a second to plop onto the sofa with a laptop. Undoubtedly, this new reality reduced stress and increased job satisfaction among employees. 

3. Cost Savings: Working from home saved employees money by reducing spending on the commute, work attire, and eating out for lunch. Eating a PB&J sandwich in the sweatpants at home is a cost-saver - we can't argue with that. 

With the pivot to at-home work, physical offices sat empty for months or sometimes years. Companies relied on digital technology like Zoom and Teams to keep their employees connected and cloud-based tools like Google Workspace and Slack to manage workflows. It was a transformative moment that challenged long-held assumptions about business communication but enabled employees to work safely in their homes. 

As the initial shock of the pandemic passed, so too did fully remote work in favor of a new hybrid model blending remote work with traditional in-office work. Hybrid schedules allow employees to divide their time between home and office, giving the flexibility and continued benefits of remote work while offering companies a few days per week to meet in person. For some, this was a welcomed change because it tackled concerns such as isolation, communication gaps, and distractions at home. We've all seen the video of a child crashing an important Zoom call. Companies quickly adapted their policies to support this blended model, and many continue operating like this today. 

But hybrid schedules have evolved as well. At first, many companies would alternate days that a group of employees would be required to come to the office. For example, half might come on Monday and Wednesday, the other half on Tuesday and Thursday, and everyone would work remotely on Fridays. Alternating days helped create more space between people in the office, back when staying 6 feet apart still weighed heavily on our minds. While the transition seemed promising, companies soon encountered challenges with a split workforce. Group A's communication with Group B is often infrequent. In meetings involving both groups, either half of the participants joined via Zoom or, often in the case of short or unplanned meetings, were absent altogether.

A hybrid workforce presents challenges for companies, many of which are the same ones they faced with fully remote work:

1. Communication Gaps: Maintaining clear communication across remote and in-office teams can be challenging. Miscommunications and delays are common issues.

2. Tech Issues: Hybrid work relies heavily on technology. Problems like internet connectivity, cybersecurity, and software glitches can hinder productivity and expose vulnerabilities. This is less of an issue when everyone works under one roof.

3. Collaboration Difficulties: Collaborating effectively when team members are at different locations can be challenging. It never works better than having all members in one place at one time. It takes more time to schedule a video call than it does to pull everyone into a conference room quickly. Companies are losing valuable time. And we know: ⏰ = 💰.

4. Corporate Culture: Maintaining a unified company culture can present a challenge when half your employees work from home or hybrid schedules. There's a risk of creating an 'us against them' mentality between remote and in-office workers. In our delicate new world, how do you ensure everyone feels included and equal? It is all but certain that in-office employees will receive more personal attention and opportunities than remote workers. By being in the office, they're the squeaky wheel. 

5. Lack of Supervision: Overseeing a dispersed workforce requires management to adapt their leadership styles. Sure, there is remote work monitoring software that you could employ at the risk of creating a 1984 work culture. However, being physically detached from the workforce makes it challenging to notice subtle non-verbal cues and comprehend the general well-being of employees, especially the introverted ones. 

6. Work-Life Balance: Wasn't this on the list of pros? Yes, but it goes both ways. Hybrid work sometimes contributes to a poor work-life balance by blurring the lines between work life and personal life. If you live in a small apartment in NYC and also work in that apartment, the walls start to feel as though they're closing in. This can quickly lead to burnout. Getting out of the apartment, walking around, getting your blood flowing, talking to people, and being exposed to the world around you are better for mental health. 

7. Office Space Usage: When you lease office space in NYC, it's crucial to manage it efficiently. After all, it's a pricey location. In a hybrid model with fluctuating attendance, figuring out the necessary office square footage can be tricky. Do you rent an office based on the maximum number of people and take a loss on the vacant space you won't use? Or do you rent a small office space and hope you don't need double the square footage 6 months from now? 

8. Employee Retention: Keeping employees engaged, motivated, and connected is more challenging when not physically present. It's easy to get off-track when you're working alone at home, especially for new hires and young employees in their first jobs. Connecting with and learning from your colleagues helps to create job satisfaction and employee retention.

While the initial transition to remote and hybrid work models seemed promising, the lack of face-to-face interaction hampered productivity. It took a while for some companies to notice their competition starting to pass them by. Unsurprisingly, the companies that first led the return-to-office charge those in some of the most competitive and critical fields like banking and financial services. Companies like JP Morgan Chase have been at the forefront from the beginning. 

THE COMPETITIVE EDGE OF FULL-TIME OFFICE WORK

Returning to full-time office work is increasingly seen as a strategic move to gain a competitive edge, as there is little doubt that companies are more effective when they're physically together. Spontaneous collaboration and brainstorming, while taken for granted before the pandemic, are now being recognized by business leaders as essential elements of creativity and innovation. Many companies are getting a jump on their competition by renting office space and fostering in-person interactions. 

Think of it like two football teams. One team allows their players to train at home; the other trains on the field. The first team receives all the latest gameplays, strategies, and drills through email or video calls, and they practice independently or in online training sessions. The other team trains together on the field and in the classroom with a head coach who gets them fired up, answers spontaneous questions as they arise, and motivates each individual to train harder. Which team would you bet on? 

COMPANIES MAKING A COMMITMENT 

While it doesn't make the nightly news, companies are leasing office space in NYC in growing numbers. In the past year, StubHub, ZocDoc, Revlon, and Indeed all renewed or signed new leases in NYC totaling over 400,000 square feet. And smaller businesses are renting office space, too.

• An investment firm subleased a Class A office space in Midtown at 712 Fifth Ave. The 2,778-square-foot office traded at a considerable discount from the prices for direct office space in the building.

• A talent agency leased a Chelsea office space totaling 1,550 square feet at 130 W 25th St. The landlord installed a new kitchen and provided office furniture, which enabled the company to take possession of the space immediately and get to work. 

• Two investment executives looking for a private office in Midtown East subleased a couple of offices from a financial services firm at 515 Fifth Ave. 

Those are all direct office leases and subleases, but many companies opted to rent office space within a flexible office space company. As the terminology suggests, renting office space from a flexible office provider (we sometimes call these NYC coworking companies) offers maximum lease flexibility. Most companies sign a one-year lease; however, many of these locations will accept a 3-6 month lease term or even a month-to-month office rental. 

We've witnessed many companies rent an office in coworking locations as a first step. This initial move towards in-office work sidesteps multi-year lease commitments and upfront costs associated with signing a lease for traditional office space. 

While many businesses started their return-to-office journey by renting office space within a coworking suite, now the trend is to move beyond coworking and rent office space from a traditional landlord or find office subleases that might fit the company's office requirements. The economics are more favorable, and you get more usable square footage with conventional offices.  

THE ADDITION OF TENANT AMENITIES

Landlords are adapting, too. Before companies started transitioning back to full-time office work, many commercial landlords, aimed at enhancing the overall workplace experience, took the opportunity to improve their office buildings with tenant amenity centers. Class A office buildings such as Tower 45 now have a dedicated area with conference rooms and AV equipment, lounge spaces with soft seating, TVs and kitchens, and phone booths if you need to take a private call. 757 Third Ave and 1345 Avenue of the Americas have similar amenities, plus a gym so tenants can blow off steam on the treadmill or weight machines. Adding amenity-rich tenant spaces to office buildings reflects a commitment by building owners to improve the workplace, making in-office work and their facilities more appealing to tenants.  

Embracing the Office Return

The transition back to in-office work highlights the importance and value of the physical workspace. The consensus is that fostering in-person interactions, collaboration, and creativity is crucial to maintaining a competitive edge in today's business environment. Your office is your company's training field, providing a physical space to strengthen team dynamics, nurture company culture and relationships, and provide the foundation for the business's success. The return-to-office is not about forcing employees to get off the couch and schelp into the city; it's a strategic move that business leaders must take to harness the company's full potential.

Are you ready to begin your NYC office space search? We work with companies of all sizes and provide tailored office solutions to fit any office space requirements. Contact us by phone or email to discuss how we can help set up your business for success.