Good news, fellow shut-ins: This month, further apocalyptic events notwithstanding, we finally (temporarily?) will be OKed to emerge from our homes after three months, squinting into the sun like newborn mice, freed by mayoral writ from our Zoom meetings, ready to return to an altered state of semi-normal and eager to get back to work. But will things ever be the same?
Over the past decade the evolution of the white-collar workplace has been swift, from offices to cubicles to co-working and open spaces. Peering into the future, which of these will survive? Not hot-desking (open spaces) or co-working; they will likely become casualties in the new, careful post-pandemic world. But so could actual offices themselves, if the cheerleaders for the new Zoom-centric remote work paradigm are to be believed.
If there’s anything being touted as a “silver lining” in the whole COVID-19 morass, it’s that shelter-in-place has taught us that many more of us can, indeed, work remotely — including some who’d had no idea it was possible. Now, freed from the tyranny of our offices and commutes, we will usher in a new era of work, one where casual Fridays become casual lives, automobiles remain idle and meetings go off without a hitch, despite participants Zooming in from various far-flung locales and secretly matching dress shirts with pajama bottoms.
This is great news — for workers looking to partially escape the rat race, for people who’ve noticed that the sky’s looked a little more blue since March, and especially for businesses looking to save money on office space; which is why this particular New Way of How We Work may not be the idyll it so far seems. It’s a revolution, but maybe not the one you want.
Since March, the plight of businesses during COVID-19 has been well-documented. Governments have responded with rent and mortgage forbearance, loan modifications — all short-term effective but essentially ways to kick the can down the road. What if what’s waiting down the road is actually worse than what’s happening now?
These moves, while necessary, are based on lessons learned during the “last” recession, in 2008, but that interruption was based on something we could understand: economic woes. This one is based on a mostly unprecedented pandemic that could be followed by a cultural workplace evolution. What happens to all of that office space if nobody ever comes back?
The depth of nothing good in this scenario is impressive. Unless someone can think of a way to turn 45 stories of office suites into parks or housing — and even then, someone would need to fund the transformation — what will probably happen first is that the market will clear of small to mid-sized investors, leaving deep-pocket whales, who can afford to wait, sit by and then pounce when prices hit bottom. Good-bye mom and pop.
While this is happening, and perhaps even after while the conglomerates decide what to do with all of this vacant space, buildings will sit empty, draining downtowns, office parks and mixed neighborhoods of workers. This eventually will filter down to service businesses — restaurants, dry cleaners, etc. If the buildings eventually get foreclosed, the tax base will suffer as well; all of this without even touching on the third rail. What happens to residential real estate in San Francisco if everyone realizes at once that they can sell their one-bedroom condo in SOMA, buy a mansion in Montana and continue working at Google, taking meetings in their boxer shorts?
Businesses will have to get creative in the post-COVID world. Some might actually expand office space to accommodate six-foot social distancing, but the trend seems to be more that they will minimize or completely jettison spaces as workers stay home. Others, upon finding their space needs shrinking, might simply purchase smaller buildings themselves, cutting out the need for landlords and property managers. Buildings will be cheap, after all. As a recent Fortune Magazine headline says: “Companies eye rental savings.”
And finally, let’s not overlook the community aspect of work. It’s the part most often overlooked, especially in a city as tech-centric as San Francisco. There is value to having co-workers, to the rhythms of going to work, to the gritty magic of emerging from BART at Montgomery and joining the army of people marching through the Financial District.
Take this away and you have a city that many might prefer — a gorgeous bedroom community with a bunch of empty buildings downtown, ripe for…something. But the economic impact of this particular workplace revolution is something that might fall into the “be careful what you wish for” box.
The Market Musings real estate column appears every other Wednesday. Larry Rosen is a San Francisco-based writer, editor, podcaster and recovering former Realtor. He is a guest columnist and his viewpoint is not necessarily that of the Examiner.