What’s the future for office space? Employees are being called back to the office, but the new office-home balance likely won’t be clear until the end of the summer.
By David Lyons
FORT LAUDERDALE, Fla. – After months of keeping employees at home to dodge COVID-19, companies in South Florida are concluding that the best place for most of their workers is back at the office.
The pandemic proved that people don’t need to sit in the office full time, but many South Florida employers are bringing people back on at least flexible schedules, shattering the illusion of a workplace revolution that leaves most people signing on from home.
“Nobody has that full crystal ball,” said Jenni Morejon, president and CEO of the Fort Lauderdale’s Downtown Development Authority. “Human beings are creatures of habit, and the notion that people will never go back to the office – that is probably a lot of hype and hysteria.”
She believes the real question is the degree to which workers are burned out “from remote working full time.”
A national survey of 185 companies by CBRE, a real estate service firm, suggests that managements now see the office as a better means of supporting collaborative work than relying on remote communications.
The firm’s Spring 2021 Occupier Survey found 41% of companies interviewed intend to return to steady office use in the third quarter of this year, while 20% are targeting the fourth quarter. Another 23% said their workers have already returned to their places of employment.
“Multiple factors support this sentiment, including the ongoing rebound of the U.S. economy and companies’ realization that they need to retain more office space than they previously thought,” said Julie Whelan, CBRE’s head of occupier research.
Some observers think companies have no choice but to recall most workers because clients are restless about the services they’re receiving.
“The biggest user of office space in South Florida tends to be banks, investment shops, wealth management companies, law firms and real estate companies,” said Stephen Bittel, chairman of the real estate services firm Terranova. “We tend not to have large corporate users here. Those service firms had businesses that are well designed to work from home.”
“They congratulated themselves” for cutting expenses through remote work, he said. But the cuts may have boomeranged for some.
“They have spent no money on travel and client entertainment, and have not replaced employees and support staff,” Bittel said. “They think they’ve bottled lightning for a moment. The flip side is that clients and customers are screaming about the incredibly slow pace of transactions getting completed.”
While many acknowledge that remote work demonstrated the benefits of technology, there is a strong belief that communication and training are better done in person. That includes people who are learning on the job.
Isabella Guttuso is a student intern from the University of Florida at EDSA of Fort Lauderdale, a decades-old architectural firm. She insists that human interaction is important for growth and for learning how to collaborate with other adults in the workplace. She is studying landscape architecture and believes it’s unlikely she’d pick up the nuances of the business via Zoom.
“I’m trying to learn and get my feet wet,” she said. “I definitely needed that interpersonal experience. We’re constantly sketching and working together and getting people’s feedback in that way. I feel like even for people not in the design field, that sense of community you get from the workplace is so important.”
Training is better done in person, agreed Brandon Isner, associate research director for Florida with CBRE. Technology can accomplish only so much.
“When people come into the office everyone is so glad to see each other,” he said, “Technology is great, and I love Zoom. That said, that human element cannot be replicated by Zoom. That’s eventually what’s going to win out.”
Firms heading back to the office
During the pandemic, the benefits of remote work depended on the industry. While harder to pull off in hospitality and leisure, which relies heavily on personal contacts with customers, professional service firms found an easier path.
“Allowing employers to work remotely on a wholesale basis will in some situations be driven by the industry,” said Denise Heekin, a labor and employment lawyer and Broward County resident who manages the Miami law office of Bryant, Miller, Olive P.A.
“Certainly, technology has made it a lot easier for attorneys to work from home and staff to work from home, and certainly it’s nice to have that option,” she said.
The firm allowed employees to work at home except for one person who staffed the office.
“We just recently went back to having each person come in at least twice a week, and we rotate that,” Heekin said. “We have papers and files and documents that may not all be on our computers, We will need a brick-and-mortar footprint.”
Some believe it will take until the end of summer before most South Florida employers settle on where their employees should land as managements try to figure out a new normal while COVID-19 variants lurk in the background.
One upshot could be smaller spaces for some companies that conclude that portions of their work forces can continue spending some of their workweeks at home.
At the same time, office spaces that remain empty are likely to be snapped up by out-of-state companies seeking new homes for their headquarters or regional operations.
“I do think we will have a reduced footprint in South Florida and around the country,’ said Siri Terjeson, professor of entrepreneurship at Florida Atlantic University’s College of Business. “But the good news is more and more companies are relocating to South Florida. That’s your silver lining.”
Some companies will reduce spaces “because you don’t need people in the office eight hours a day, five days a week,” she said.
“When people’s leases are up for renewal they will dial back the space,” she added.
The volume of companies seeking office space is on the rise, said Ken Krasnow, vice chairman of institutional investor services at Colliers International, the real estate services firm.
“Six months ago, at the height of the pandemic, there was a real thought of ‘do people need to go back to the office in total?” ‘he said. “What we’ve heard from our clients is the number of companies looking for space has exponentially increased in the last 30 to 60 days. You talk to office brokers out there and they’ll tell you there are a lot of tours.”
The theme is an important sales point for commercial real estate brokers who have clients with space to lease.
“Across the board, whether companies are adopting more flexible office schedules or not – the space itself is being viewed as a place to support a company’s ability to attract and retain talent,” said Tere Blanca, CEO of Miami-based Blanca Commercial Real Estate, which represents large commercial landlords in Broward County.
Locally, the demand for space from companies seeking to relocate is on the rise, brokers say,
A unique market
From Miami to West Palm Beach, analysts say, the office market is unlike any other in the country, with more new tenants signing leases,
“Miami and South Florida are a bit of an outlier,” said Isner of CBRE. “No one’s concerned about our office market right now. We’ve seen an unprecedented amount of new interest in this market.”
Isner has seen heavy leasing activity by new tenants in West Palm Beach, Boca Raton, Plantation and Fort Lauderdale. “They’re signing leases and they’re expanding,” he said.
Interior design firms are getting a lift.
“We’ve seen a major impact in our industry all the way around in the last six months or so,” said Brianna Brown, president and CEO of Fine Line Furniture and Accessories in Coral Gables.
“We’re seen a huge increase in professionals wanting to reopen their businesses, or we have an influx of corporations coming from other places in the U.S.,” she said. “They know and they understand how people feel about returning to work. They’re really trying to alter their atmospheres. Some people want to jump back in. For those [employees] who are hesitant, they’re trying to make it a better environment to appease them.”
In downtown Fort Lauderdale, which has seen a building boom of high rises designed for office, retail and apartment living, economic development advocates argue the city’s business district will remain attractive as a center for work.
“I think downtown Fort Lauderdale is going to be well-positioned” as a place for more companies to set up shop, said Morejon, at the Downtown Development Authority. “There’s this sense of community and place as opposed to suburban office parks where you’re back to driving to the parking lot and walking into the building.”
The city’s leasing rates are cheaper than its counterparts, which is another incentive to move downtown, she said.
Christina Stine Jolley, a vice president of Blanca Commercial Real Estate in Fort Lauderdale, said the 35-floor The Main Las Olas, a new 1.4 million-square-foot, mixed-use office, residential and retail community, is leasing up quickly.
“Over 50% of that activity is from out of the [local] market,” she said. Two professional service firms from New York each signed for between 8,000 to 10,000 square feet. She declined to identify them.
“We’re over 50% leased right now,” Stine Jolley said. “If we close every deal we are negotiating, we would only have two floors left.”
Allure of suburbia
Outside the city limits, brokers and employers see advantages operating in the suburbs, where people don’t have to jostle each other in crowded elevators and battle downtown traffic.
“It seems like there is a reevaluation taking place of the need to be in an urban center,” asserted Jonathan Calderon, director at Gibraltar Realty & Management. His firm represents Monarch Gardens in Miramar, which offers nearly 100,000 square feet of office and retail space.
“This whole [pandemic] experience has proved how people can work outside of the office, but on a human level there is a desire to collaborate in person and not have appointment-driven dialogues with your peers,” he said.
How companies choose to reconfigure workspaces “will come down to the resourcefulness and empathy of each individual company,” he said. “Those companies that want a smaller footprint will undoubtedly have an easier go of it than somebody occupying an entire floor plate.”
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