Google, others are adding desktop space ahead of the big comeback

Since January 2020, Google’s parent company, Alphabet, has spent nearly $ 100 million expanding its U.S. commercial real estate portfolio, including a $ 28.5 million office it bought in Sunnyvale, California, when the pandemic was at its height.

Most recently, Alphabet announced in January that it would spend $ 1 billion on a campus-like office environment in London.

“We want to introduce new types of collaboration spaces for personal teamwork, as well as create more overall space to improve well-being,” writes Ronan Harris, Google’s CEO of the UK in a blog post. “We will introduce team pods, which are new types of flexible spaces that can be reconfigured in several ways that support focused work, collaboration, or both, depending on team needs. The new renovation will also include covered outdoor workplaces so fresh air can occupation. “

The goal, Harris said, is to provide employees with a flexible space with facilities to lure them into the office, while acknowledging that many of them still want to work from home “a few days a week.”

google desktop space BDG Architects 2021

Google plans to offer a quiet zone in its UK office for people-focused work – and an interactive art installation to support employee well-being.

The trend of desktop extensions goes far beyond Google. In 2019, before the COVID-19 pandemic, U.S. organizations bought 60,346 commercial properties, according to the Altus Group, a commercial real estate company. This number dropped to 57,174 in 2020, but rose last year to 78,354 properties.

And in the first quarter of 2022, organizations have already purchased 22,423 commercial properties. If this trend continues, the number of purchased office buildings this year will exceed those demolished in 2021.

“The numbers are consistent with Google’s rise in office space hoarding, so it looks like The Great Resignation is not burdening companies that value office space,” said Ray Wong, vice president of data management for Altus Group. “We’ve seen a lot of activity among tech companies taking up more space, not just buying it, but renting it. Amazon and Facebook are all adopting the expansion strategy.”

office bookings graphically edited Robin Powered, Inc.

On average, employees’ booking time at their company office has increased over the past three months.

The United States initially lost 138.4 million square feet (MSF) of office space in a year and a half after the declaration of the global COVID-19 pandemic. The data showed that more and more companies began to sublet their space as the workforce became more flexible. Given the uncertainty of what the hybrid workforce will look like, landlords and residents have begun offering shorter rental and sublease terms, according to a 2021 report from real estate firm Cushman & Wakefield.

The shorter rental conditions have proven to be the right move as companies are now moving to regain this space.

Office subleased inventory fell for the second consecutive quarter, according to the latest report from Cushman & Wakefield.

“There is no single standard for the future,” Cushman & Wakefield said. in their latest report. “Most organizations believe that the office is now the perfect place to build culture and inspire creativity and innovation.”

Based on the 90 U.S. markets tracked by Cushman & Wakefield, total leases in the 1st quarter of 2022 increased by 19% from the 1st quarter of 2021, and mobile rental activity in four quarters increased by 41% compared to last year. Rental of Class A office space accelerated even faster; that is an increase of 47% year over year. With 349 million square feet of total rent over the past four quarters, the United States is back above its historic pre-pandemic average of 1.4%, according to the firm.

“One thing I would say is that one size does not fit all. If someone tells you that everyone’s shrinking as a result of the pandemic, that’s not true, ”said David Smith, head of resident research at Cushman & Wakefield. “Companies are rethinking the way this space is oriented. They focus on collaboration spaces and spaces of different sizes. We see companies wanting to expand their portfolio. This is the right time to do it. We have seen it with other recessions. Locking space in the long run with better prices or concessions. “

changed weekly office utilization rates Robin Powered, Inc.

As COVID cases declined, office utilization rates increased.

As organizations begin to understand what a hybrid workforce will look like, many are expanding their square footage to create safer and more attractive workplaces that allow for more space between desks, hot desks, large lounges, or breaks and larger outdoor spaces. They also uncover their efforts to ensure that the workforce will continue to grow over time as their businesses expand.

“As time goes on, compared to a year ago, there is more openness to return to the office, and Google and property owners are looking at what kind of facilities will bring people back in,” Wong said. “With technology companies, they’re going to grow, and they anticipate what that growth is. They decided they needed potential real estate to achieve their strategic goals.

“Ultimately, organizations focus on flexibility. »

The technology industry remained the main rental driver until the end of 2021, accounting for 21% of fourth-quarter activity, according to Jones Lang LaSalle IP (JLL), a commercial real estate and services company. Technology companies added about 3.3 million square feet of rented office space in the last three months of 2021.

“It’s not just technology companies,” Wong said. “Some companies are expanding in anticipation of growth or adapting their space requirements to what they may need in three to five years.”

Last month, the average occupancy rate on the Kastle System Return to Work Barometer rose to 40.5%, up from 39% in November 2021. This is the highest rate since March 2020, and all cities in the Return to Work Barometer experienced an occupancy increase. (The barometer measures occupancy rates in 10 metropolitan areas, including New York, Chicago, Houston and Washington DC)

Kastle Systems is a managed security provider for over 10,000 companies worldwide; it uses employee badge scan data to determine workplace occupancy.

In a new twist, organizations are now choosing to lease new or renovated buildings over older fixtures, which are more likely to be converted into living quarters or senior housing or assisted living facilities, according to Peter Miscovich, CEO of JLL.

Companies are also moving more to a co-working space or “hot-desking” model where desks are shared, based on scheduled office work days, said Phil Ryan, U.S. research director at JLL.

Office use is slowly increasing, primarily because employees’ fears of COVID-19 are diminishing, and global companies are demanding a certain level of office participation, according to Robin Powered Inc., a software provider that enables employees to reserve office hours.

U.S. employees worked in the office an average of 4.9 days a month, up from 3.7 days in December 2021, according to a new report from Robin. “… It’s good to see a slow and stable build-up, although the Omicron variant slowed growth in this category in January,” said Eric Lani, Head of Product Analytics at Robin.

The U.S. and Europe saw an 18% increase in the total number of employees working from the office in the first quarter of 2022 compared to the last three months of 2021, according to Robin.

“These numbers do not tell the whole story,” Lani said in a blog post. “Despite constant growth rates, the average daily occupancy rate in the two regions is very different. US companies have an office capacity of 25%, while Europe sits at 35%, indicating that EU team members work more frequently in the office. »

The bounce rate – the percentage of people who come to the office only once in a 30-day period – dropped to 18% in the first quarter of 2022, the lowest since the spring of 2021, indicating that people return to the office more regularly, according to Lani.

Office traffic is not limited to employees. The average company hosts about five guests a month. The most common types of guests are attendees at corporate events (20%) and customers (15%), according to Lani.

Companies that want people in their bed stalls should focus on carrots, not sticks, according to David Lewis, CEO of OperationsInc, a human resources consulting firm in Connecticut. In other words, let employees experience the benefits of being in the office for themselves instead of forcing them to be there.

Although the number of offices remains below pre-pandemic levels, it continued to rise through March, according to Cushman & Wakefield, with reconsidered areas of work likely to generate additional demand throughout 2022.

Employees who had a positive experience on their first visit to the office came in 10% more often than those who had a negative experience, according to Robin Powered’s survey.

Office restoration will be differentiated based on building quality, class and submarket type. To date, suburban sub-markets have recovered somewhat faster and Class A office space remains in demand. Class A offices are the most prestigious buildings competing for the best office users with above-average rents for a given area.

google office break space BDG Architects 2021

A place where Googlers can take a coffee break or take a quick one-on-one tour of soundproof booths at the UK office.

“Employees want a quality office experience,” said Smith of Cushman & Wakefield. “They want better air quality and better access to the outdoors, and they want to be the best places. All of these things are more important in an agile work environment and to make the office interesting and productive for the employee. »

Copyright © 2022 IDG Communications, Inc.

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