Office Space Outlook: The Continued Evolution of the Way People Work

With the delta variant impacting return-to-office sentiment and protocols, as well as indicators that COVID-19 will be something we must deal with indefinitely – at least on a seasonal basis – some companies and office developers are once again reevaluating how office space will be utilized going forward.  

BLT Enterprises, headquartered in Santa Monica, CA, is in a position to speak to this process, having executed several office/flex space renovations, including implementing several innovative, flexible floorplans, both before and after the pandemic. The firm’s VP of development, Lisa Tamayo, shared insights with Connect CRE. 

Q: How do you envision offices will be utilized throughout the remainder of this year? 

A: Office leasing activity saw meaningful increases in Q2 – reaching a volume of more than 30 million square feet for the first time since the onset of the pandemic. 

While still significantly lower than pre-pandemic numbers, this activity indicates progression in the sector’s recovery. High-profile movements, like Google’s plans to purchase a New York office building for $2.1 billion, demonstrate continuing faith in the critical role of workplaces in the future. 

We anticipate these next few months will see a continued increased use of physical office space on a regular basis, as more firms are solidifying what their office policies will be and potential changes needed to support these. 

Q: What types of office spaces are doing well at this time? 

A; We are still observing a strong preference for office space in free-standing buildings and low-rise complexes, which allow users to enact more control over their space to ensure employee safety. 

Our creative office assets have continued to perform extremely well throughout the pandemic, as open and flexible space has proved especially crucial. Common attributes of these spaces include concrete floors, exposed ceilings, and access to abundant natural light. 

As an example, we redeveloped a shell industrial building into creative office in West Los Angeles based on an innovative concept that positions private managers’ offices near open areas utilized by their respective teams, and includes additional open space for collaboration, private phone rooms, and meeting rooms of various sizes. 

While the initial renovation was completed in 2019, these features proved even more crucial and attractive in the COVID world, allowing us to quickly secure a top quality, credit tenant in the midst of the pandemic. 

Q:. How has your approach to the development, renovations, and management of office/flex space changed over the last year, if at all? 

A: We’ve always approached office/flex space projects with a clear vision of how our tenants will realistically work day-to-day, and create spaces that can be adapted to their needs over both the short and long term. 

That said, one way the pandemic impacted the development of our projects is a deeper consideration and implementation of ‘health-conscious’ designs, thinking beyond COVID and rather at what amenities will help occupants feel safe and comfortable, while ultimately staying healthier over the long term. 

For example, with our recent and current projects – including a renovation of our own offices in Santa Monica – we have incorporated several touchless features, as well as efficient air filtration with ion generators. On the management side, we ensure that we are in consistent communication with our tenants as their needs evolve. 

Q: Based on current trends, do you anticipate a long-term demand for flexible office spaces that accommodate social distancing and hybrid work environments? 

A: Absolutely – for many companies, mandatory stay-at-home orders demonstrated both the potential for increased productivity when working remotely, as well as the importance of in-person collaboration for certain industries, projects, and tasks. 

Further, sentiment surrounding protecting ourselves and others from illness, as well as supporting overall well-being, has facilitated more lenient policies surrounding when employees are able to work from home and changed how office space is utilized. 

While everyone works differently, some degree of hybridity or flexible options has been successful for many companies.