Jim Kramer on CNBC Squawk Box recently rhetorically asked: will this mandated “work from home” be the Netfix for office buildings as Netflix was for movie theatres? I don’t think the analogy fits. Pre-COVID 19, tenants were laser-focused on collaborative spaces, amenity rich buildings all to foster company culture. I don’t see how technology can replace the human experience. Instead, I think we’ll see more of an evolution (versus revolution) of the workspace, including work from home as part of the strategy.
As Bisnow recently reported, CoreNet Global’s April 28, 2020 survey of corporate real estate professionals found that 69% of companies are planning to reduce their office foot print after the recent forced work from home experiment. By contrast, former Google CEO Eric Schmidt on a recent “Face the Nation” interview predicts that office space will be in greater demand due to social distancing and more smaller offices in a “hub and spoke” format. I question, will the appeal of remote work still be attractive to employees after this pandemic passes and they have a choice? While the jury is out on the long-term implication of remote work, in this post, I address the Pro’s and Con’s and what policies companies should consider implementing to have an effective work-from-home (“WFH”) strategy.
With strong office markets in many parts of the country, landlords are becoming rather bullish. In that spirit, they are looking to maximize leasing flexibility in accommodating new and growing tenants. One leasing flexibility tool that landlords have in their toolbox is the right in the lease to relocate a tenant. While tenants want to see their landlords succeed in keeping the building well occupied, they are more concerned with maintaining a productive office. Relocation is extremely disruptive for businesses when they are planning to move at the expiration of their lease; it’s even worse when the landlord issues you a notice out of the clear blue that they are going to relocate you. Even though the relocation move is typically paid for by the landlord, assuming the tenant has negotiated that into its lease, that is little consolation for the intangible loss in productivity to the tenant’s business. Outlined below are strategies to fundamentally eliminate this right and, where that is not feasible, to neuter it as much as possible.