Editor’s Note: This WRAL TechWire’s Commercial Real Estate special report “Follow the Numbers” is supported by commercial real estate firm CBRE Raleigh.
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RALEIGH – Among the most enduring changes to emerge from the COVID-19 pandemic is a structural shift in the way people work and the qualities companies are seeking in their office space. There are many forces at play when it comes down to whether companies can coax employees back into the office on anything resembling a full-time basis. It is a battle sure to have consequences that impact office-space design and utilization.
With pandemic-related public health risks now subsiding, employers are coaxing staff back to in-person work environments in both subtle and not-so-subtle ways. Just as tech firms led the way in allowing remote work three years ago, they are now the most visible companies bringing them back.
A company-wide email from Fiona Cicconi, chief people officer at Alphabet Inc’s Google, recently spelled out new measures regarding hybrid work that include tracking company badge swipes and sending written reminders to those with frequent absences. Most notably, the company will begin including attendance in its employee performance reviews. Cicconi’s note suggested the company is seeking better connections among Google teammates who spend at least three days a week at the same location. “Of course, not everyone believes in ‘magical hallway conversations,’ but there’s no question that working together in the same room makes a positive difference,” her email said.
CEOs of AT&T and Farmers Insurance Group have made similar public pronouncements regarding their desire to return workers to the office at least three days a week. Tesla CEO Elon Musk even suggested the issue is a moral one. In an interview with CNBC, Musk said it’s wrong for those in the “laptop class” to work from home while manufacturing workers and service employees still have to show up in person.
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Companies in the Research Triangle are taking a more circumspect approach. COVID-19 hit just as Ramey Kemp Associates was going through a significant growth spurt in its workforce. Serving clients in the Carolinas and Virginia, the engineering firm specializes in transportation projects. Having doubled its workforce to 100 in recent years, more than half its staff has been with the firm fewer than four years. That puts a premium on mentoring, says Will Collins, principal at New Venture Resources, which provides human resource services to Ramey Kemp.
“Employees with less experience have an interest in coming in and learning from our more experienced people,” says Collins, who has spent 50 years in the HR field. Those at more advanced stages of career appreciate the value of relationship-building and personal interaction with colleagues. “They know how important it has been to them in getting where they are, and they’re eager to share that,” Collins says of more seasoned employees at Ramey Kemp, which was founded in 1992.
Still, the company allows employees who prefer remote work to make their case through a formal application process that includes a brief business plan. Applicants must describe how they intend to structure their workday, minimize distractions and interact with clients professionally. They are also required to attach a photo of their home workspace. If approved, they may work remotely up to two days a week. “We evaluate each request on a case-by-case basis,” says Collins. Thus far, no request for remote work has been declined, but the company preferred not to disclose how many of Ramey Kemp employees are participating in the arrangement.
Collins says the program provides flexibility, a hallmark of the company’s culture. “It’s been one of our strengths in the past, and we think it’ll be something that sets us apart going forward,” says Collins, a former N.C. Assistant Commerce Secretary for Workforce Solutions who has worked with Ramey Kemp for the past four years. “We’re just continuing more of the same,” he says.
Part one in this series:
As tech firms tap the brakes, data suggest softening demand for Triangle office property
Key changes were also afoot at IAT Insurance Group when COVID struck. The company was set to relocate its 175-employee Raleigh headquarters operation to 61,000 sq.-ft. of office space at Kane Realty’s Advance Auto Parts Tower in North Hills in 2020. “We had heavily invested in real estate so our employees could have a comfortable physical space,” explains Jennifer Paris, assistant vice president for HR operations at IAT. Their hope had been to spark connections and idea sharing. The company brought its 1,000 national employees back to the office in June 2021 with a hybrid workweek that included mandatory in-person presence in the office Monday through Wednesday and remote work available on Thursdays and Fridays for most employees.
“Some of our employees don’t have the option,” Paris explains. The 13 percent of the workforce that must report to the office each day includes key equipment maintenance and administrative specialists. “But we do try to accommodate everybody,” she says.
The solution has worked out well. “We currently have no intention of going back to five days a week at the office,” says Paris. Despite a tight labor market, especially for actuaries needed by the insurance industry, IAT has not relaxed its work-at-home policy to appease job applicants asking for completely remote work. “We’re really sticking to our guns,” Paris says.
Executives at IAT Insurance have begun holding yearly “community forums” with employees to check the pulse of its workforce. Feedback has been positive. Paris says the company’s youngest workers appreciate the need for regular office attendance to develop skills and grow professional networks. It’s staff at mid-career who appear to prefer more remote work, and those are the very employees needed to share knowledge and help young hires connect with company culture. “That’s where the gap is going to come in, and we feel it’s so important for folks to be in a physical space together,” according to Paris, who says she herself found fully remote work during the pandemic “very isolating” and returned to the office earlier than most the company’s team.
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Striving for flexibility and feedback, as well as paying attention to changing generational preferences align neatly with the advice of Darren Masier, assistant professor at Meredith College’s School of Business, where he teaches graduate and undergrad courses in human resources. Masier believes Millennials — those currently in their late 20s to early 40s – value flexibility in their work lives and careers more than their parents and older siblings. “There has to be a compromise between the way we used to do things and the wants, needs and desires of a new generation,” says Masier, who is in his mid-50s. “There is so much to think about here.”
HR professionals can respond to employee requests for remote work with candid conversations about commuting costs and childcare challenges, for example, or other objections to mandatory office days, Masier advises. “Dig into the why’s.”
Offering office space equipped with the full complement of Class A amenities is also now a strategy for luring staff away from their at-home workspaces. In an interview on Bloomberg, CBRE Chief Executive Officer Robert Sulentic summed up the importance of high-quality space. “These newer, better-configured, better-infrastructure office buildings where companies are trying to create a really high-quality experience for their employees to get them back in the office, those assets are doing quite well,” Sulentic said. “You really are seeing a push from companies to get people back in.”
This trend is playing out in the Triangle’s office market as well. “Companies are increasingly willing to pay a premium for amenity-rich locations that drive engagement and help attract talent,” said Elizabeth Gates, a Senior Research Analyst with CBRE|Raleigh. “In some cases, it makes sense for property owners to invest in upgrades and additional amenities to keep their buildings competitive. For older suburban office parks to remain vibrant economic drivers, municipalities may need to partner with owners to allow for additional uses such as retail or multifamily.”
Sulentic says CBRE analysts predict tenant demand for commercial office space will bounce back only to about 80 percent of pre-pandemic levels. “I do not think it’s going to go back to where it was,” he said.
In CBRE’s Spring 2023 U.S. Office Occupiers Sentiment Survey, 65 percent of respondents indicated their companies are making employees return to the office. Professional and financial services firms are leading the way, with 71 percent of them now requiring a return to the office. By comparison, just 56 percent of tech industry respondents said they now require a return to the office.
