CLEVELAND — COVID has already changed how many Ohioans have worked since March, and as the coronavirus carries on, experts say it’s drastically changing the role offices will play in the future.
“Office space has always been on our radar,” said Growth Opportunity Partners (Growth Opps) President and CEO Michael Jeans.
Growth Opps consults for a long list of companies around Cleveland on various parts of their business. Jeans says even before the coronavirus swept through Ohio, office space was an important piece of a company’s expense sheet.
With the coronavirus sending many workers home, office space is an even bigger focus for all businesses, Growth Opps included.
“We’re spending money for space we’re not using,” said Jeans.
Growth Opps and its clients are hardly alone.
Newmark released a report on the Cleveland Office Market that showed of 360,582 square feet of office space on the sublease market at the end of the third quarter, “60,799 and 52,825 square feet of sublease space came online in July and August, respectively,” the report wrote.
“The sublease report shows that people are saying, geez, I don’t know if we need this much office,” said Newmark Vice Chairman Terry Coyne.
That’s where brokers like Coyne come in to help existing companies deal with the expense of paying rent on an office building workers aren’t reporting to.
“If there’s any way to mitigate my rent, I’d love to mitigate it by renting it to someone else,” Coyne says companies are thinking right now. “The problem is everyone had the same idea at the same time.”
As a result, Coyne says the primary office market is taking a hit because subleased space is so much cheaper.
“The benefit to that is I think it’s going to make building owners in the primary lease market wake up and say we need to differentiate ourselves,” said Coyne. “We need to have buildings with amenities, we need to give you reasons to go to work otherwise you’re just Dilbert in your cube and you may as well just stay home.”
That means heating up the amenities market, leading to newer and nicer gyms, bike racks, and treats like golf simulators for when workers come into the office.
“So you’re seeing upgrades by landlords that have the money and those that don’t are going to lose tenants,” said Coyne.
Jeans points out there will also be differences and changing approaches to what companies ask of their employees.
“My team is highly productive, working from home,” said Jeans. “We’re not giving up revenue per square foot, but we have an underutilized space.”
That’s why Jeans says companies might have to change how they use their space. He says if workers are productive at home, he expects companies to allow them to stay home much of the time, giving them more flexibility for family needs.
Occasional in-person meetings with a smaller staff that comes to the office every day might be the way of the future for business and family.
“I think it’s less about place and more about what do we really value,” said Jeans. “I think the pandemic is going to make us think twice about how we value our time.”
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