RIO DE JANEIRO, BRAZIL – The return to the post-quarantine work routine will be very different from what it was before the outbreak of the pandemic. The home office is being implemented in most companies and, in many cases, it has worked well.
In fact, 40.2 percent of companies did not work with the method before the crisis and will definitively adopt it when this period passes, according to a Cushman&Wakefield study.
The study included 122 companies from different sectors, located in São Paulo and Rio de Janeiro, and interviewed mainly the CEOs, VPs, and directors who decided on the implementation of the home office.
Cushman also shows that 45 percent of respondents will reduce physical space after the crisis, 30 percent will do so because of the successful experience with the home office implemented temporarily during the crisis, and another 15 percent will do so because of the economic impact generated by the pandemic.
Among the companies that will reduce their space, 25.3 percent say that the cut will be from 10 to 30 percent of space, whereas another 16.2 percent say they can cut as much as 50 percent.
For Jadson Mendes, Head of Research and Market Intelligence at Cushman & Wakefield’s commercial real estate services company, the post-pandemic process is the opposite of what has been in place to date.
“In recent years, a process of further expansion of office space was developing. What we call ‘open space’, when the bosses’ rooms are gone, and more people occupy the same environment. Now the world has stopped and everyone is wondering what the office of the future will look like, since it is sure to change,” he says.
Office of the future
As a result of this change process the “Six Feet” model emerges, to show what this new working environment could look like.
Mendes says that Cushman & Wakefield is following around 10,000 companies in China in the process of opening their businesses after the peak of the pandemic. “We are analyzing several business resumption models and this has produced a good practice manual that will help companies in Brazil as well. It was in this context that the ‘Six Feet’ model, which is actually a measure [equivalent to 1.8 meters], stood out,” he explains.
The name refers to the distance between the employees’ desks that respects the health authorities’ recommendations. “This model requires greater physical space. This means that in the case of companies that will not adhere to the home office, it would be necessary to expand the office to accommodate the same amount of people under a new space distribution,” he says.
Below is a simulation of the new space:
According to Mendes, in today’s work environment, it is recommended that each professional has between seven and eight square meters of space for themselves. “In coworking, this measure drops to about five square meters, and in call centers, for instance, it can reach three and a half square meters. This proves that in the future, many companies will have to adjust to the new model, which requires around 11 square meters per person,” he explains.
The model that Mendes presents should be implemented through a six-stage process: “Adapt the building, instruct employees, control access in a different way (facial recognition or even release entry), create a social distancing plan within the company, reduce touchpoints and intensify cleaning within the company, and communicate with confidence,” he explains.
He stresses that this is only one alternative under study and not the only possible solution. The ideal, according to him, would be to merge offices – that is, companies adopt the home office two to three days a week and implement the six feet in the remainder. “Thus, people can use the same space that was reduced and there is an optimization,” he says.
Also, companies can adopt a permanent home office for part of the teams and keep other teams in person, which could also balance the equation.
“But there’s a risk of companies joining the home office and freeing up space, but other companies prefer to adopt face-to-face models and need more space and occupy these empty offices. And then one model cancels out the other in property terms,” the expert considers.
However, if this equation does not work equally, companies that do not implement the home office should increase their physical space following the health recommendations. And that’s where a number of difficulties come into play.
Further challenges
This change in the profile of offices includes more factors in the account that companies need to do during the crisis: in addition to labor issues, they will need to review the financial aspect and develop strategies on how to adapt to the new spaces.
“If the company permanently adheres to the home office, the reduction of costs with space rental can be an advantage. But, generally, these corporate real estate contracts are long-term and, if the company breaks them, it pays a fine. So, the company can’t make this change overnight at no cost,” Mendes explains.
Moreover, this future office model can be expensive. “Adjustments can be costly. New buildings may have the technology, but many will have to implement it. Mainly, in this reopening stage, the costs will be high: there’s cleaning, maybe new spaces … everything is going to be an investment”, he says.
Another challenge is to find buildings with enough room. Today there are 76 buildings considered class A in the business center of the city of São Paulo, which includes the regions of Avenida Paulista, Faria Lima, Itaim Bibi, Juscelino Kubitschek Avenue, and Vila Olímpia. The data are from another Cushman study.
With the vacancy of corporate offices in São Paulo currently at around 16 percent, the supply restriction is great. “There is no space. And in areas like Itaim Bibi, there is a one percent vacancy,” he explains.
“Now, the exercise: which of these buildings can accommodate tenants in two thousand square meters of contiguous areas, either one of two thousand or two of one thousand within the same building? Only four. In other words, these companies will find it difficult to move to another building due to low vacancy. They’ll have to negotiate or they’ll have to move to locations that aren’t considered prime, which ultimately becomes status for the company”, he explains.
This is precisely why the corporate real estate market is not showing a downward trend in prices, nor a greater vacancy due to the crisis. “On the contrary, the sector, which has resumed in cycles and slower, is still rising from the 2014 and 2015 crisis. So, prime regions in São Paulo, for one, which is already expensive, are going to be even more so, because the price had dropped considerably soon after 2014 and 2015 and is now coming back fulfilling the cycle”, he says.
According to Cushman’s data, the average rental price on Brigadeiro Faria Lima Avenue rose 19.5 percent in April 2020 compared to April 2019. On Paulista Avenue, it increased 15.6 percent in the same month this year compared to April 2019.
“Even in the recession, we cannot say that prices will drop and companies that need space will have to invest. There is little stock coming in and the prices are increasing. For instance, this year 142,000 square meters in new buildings are expected to emerge in São Paulo, but only 12,000 square meters of this total have already been built. But in 2019, the stock was only 33,000 square meters. When we look at 2013, it reached 400,000 square meters. These are cycles and the scenario reduces the vacancy”, says the executive.
Despite the difficulties, Mendes believes that the changes taking place are positive. “We can’t stop and everyone will have to adjust. Surely it will be challenging, some companies have businesses that require a physical presence, each company will deal with its own factors and internal scenarios – beyond the pandemic”, he concludes.
Source: InfoMoney