New offices for the hybrid era? Many companies are on board

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OMAHA, Neb. – If you build a shiny new office building, will your employees show up to work there?

Many American companies are betting on it because they think in-person work is better for collaboration and training young employees. So while most employees still work from home offices and dining tables today, some companies are willing to spend big on storefront headquarters.

Businesses recognize there is a place for offices despite planning to give workers more flexibility to work from home and could see cost savings by limiting their real estate holdings.

In a sign of companies’ commitment to retaining offices, some 57% of the more than 2,300 office projects architectural giant Gensler is currently working on were launched last year amid the pandemic. But as they build, companies are tweaking designs to reflect that offices can become places workers primarily visit to collaborate with others, instead of places where they work all day. , everyday.

Jordan Goldstein, joint venture managing director at Gensler, said companies are prioritizing having more meeting rooms with technology to accommodate remote and in-person attendees, as well as more flexible space for so people can choose where they work in the office.

Mutual of Omaha plans to build a new glass-enclosed headquarters in its namesake Nebraska city that could become Omaha’s tallest building.

But the insurance company says the plans for its new building reflect its commitment to flexible working. The company has 4,000 employees in the Omaha metro area but plans a building that can only accommodate between 2,200 and 2,500 people per day, Mutual spokesman Jim Nolan said.

“The only way that works is to embrace remote and hybrid working,” he said.

The number of people working remotely is clearly increasing as many companies have learned they can do so during the pandemic. The Society for Human Resource Management estimates that the number of fully remote American workers will double to around 36 million people by 2025. But that trade group’s CEO, Johnny C. Taylor Jr., said that still won’t represent just over 20% of the workforce. The remaining nearly 80% will work in an office at least some of the time.

Another survey last year by CBRE Group, the world’s largest commercial real estate services and investment firm, showed that 87% of large companies planned to use a hybrid schedule post-pandemic, with employees in the office part of the time.

And separate worker surveys that SHRM and Gensler conducted last fall both showed that more than half of workers wanted to be back in the office at least one day a week.

But so far, companies have been slow to bring their employees back. On average, 36.8% of the workforce was back in offices during the fourth week of February in 10 major US cities monitored by Kastle Systems, which tracks building access card readings. This number has increased since early January, when it fell to 23% during the omicron surge.

Mutual of Omaha CEO James Blackledge says bringing people together in an office at least periodically will boost productivity and creativity, and having a shiny new $433 million office should help the company attract new talent. . Additionally, the new headquarters will likely be smaller overall than Mutual’s current headquarters complex, but the exact size will be determined later in the design process.

Elsewhere, two high-profile projects already underway are the new Walmart headquarters being built in Bentonville, Arkansas, and the new New York home for bank JP Morgan Chase.

Walmart said it was overdue for a new headquarters regardless of the pandemic, as it currently spends tens of millions of dollars each year to maintain an outdated patchwork of more than 20 offices in northwest India. Arkansas for its administrative and support staff.

JP Morgan CEO Jamie Dimon said the rise of working from home could mean the company only needs 60 desks for every 100 employees because they will be shared. But he remains attached to a new headquarters for 12,000 to 14,000 bank employees because many tasks will still need to be done in person.

Deluxe, the company once known primarily for printing checks that now processes nearly $3 trillion in payments a year, invested $12.2 million during the pandemic in a new 94,000 square foot headquarters in Minneapolis. which opened last fall. When they return more regularly later this month, employees will need to be there more often than they are working from home.

But the new headquarters is less than a third the size of Deluxe’s ​​old one. The company has halved its overall nationwide real estate footprint to better reflect its current needs with more people working remotely.

Deluxe CEO Barry McCarthy acknowledges that some parts of each of his employees’ jobs can be done remotely, but coming together and being able to work as a team is a more important component.

“There are very, very few jobs that are just individual contributor jobs with little or no interaction required from others,” he said.

McCarthy, like many CEOs, says he thinks office work is best for training and mentoring younger employees because they can better watch and interact with their colleagues and get more immediate feedback on their work.

Footwear and apparel company Merrell’s 100 or so employees moved into a new office in Rockford, Michigan in January. The project was underway before the pandemic hit, but CEO Chris Hufnagel said the company reworked the plan after it became clear many employees would continue to work from home, at least some of the time. . Hufnagel said he thinks the office will be the “epicenter” of the company’s work.

“I think everyone realizes that there are parts of our job that we do better when we’re together,” Hufnagel said.

And then there are companies planning to largely do away with their offices in favor of remote working. But even these companies can maintain a small office presence.

Intradiem CEO Matt McConnell said the software company had its most profitable year ever in 2021 and didn’t miss a beat as its 150 employees and 75 contractors all worked at distance. After checking with employees, the company switched to a remote plan and will let its current headquarters expire at the end of 2022.

“It’s just this big empty space that nobody uses. It makes no sense to maintain that,” McConnell said.

But Intradiem, which is based in Alpharetta, Georgia, will likely keep a smaller headquarters with space for its IT people to gather materials to send to home workers, and the company will encourage teams to meet occasionally in person. . They can also rent space in shared offices managed by WeWork for employees nationwide.

Modular flooring maker Interface just opened a new headquarters in 2018, but the pandemic prompted the company to spend $400,000 to remodel the building and invest in new technology and furnishings to accommodate the workers who are only in the office part of the time.

Darby Gracey, director of work life and workplace strategy at Interface, said she knows the roughly 175 employees at the corporate office have not missed commuting through Atlanta traffic. while they worked from home, but the company asked them to come back at least part of the time.

“We think a lot of culture comes from being able to sit down and have a cup of coffee with a colleague or have a whiteboard session with a teammate – just getting together in person and being able to read body language – we I believe there’s a lot of value in that and it’s something we’re very strong on,” Gracey said.

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