Will remote working mean an end for the corporate HQ?

Will Covid-19 bring about the end of the office? It’s a question some businesses are considering as they look at ways to return to something like normality.

Remote working may have been forced upon most companies but many have been surprised at how quickly employees have adapted. With plans to bring people back into the office proving to be a logistical nightmare, some companies may be tempted to ditch it altogether and keep most staff working remotely

US insurer Nationwide, which employs more than 32,000 people, recently announced plans to close most of its offices and have up to 98 per cent of its workforce based at home from November. Elsewhere, Twitter has told staff they can work remotely on a permanent basis, while Barclays chief executive Jes Staley and Mondelez (Cadbury's) boss Dirk Van de Put have both cast doubt on the idea of having buildings full of people in a world dictated by social distancing.

The death of the office could be particularly significant in Ireland given the large number of multinationals that have built a presence in Dublin. Big tech companies such as Amazon, Google, Facebook, LinkedIn and Salesforce continue to lease property across the capital as they take on a seemingly endless number of people. But if they can encourage most of these recruits to work from home, might they decide against continuing to build their physical empires?

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Johnny Ronan, the property developer who has been building most of the big office developments for tech giants here, laughs at the idea that the office may become a thing of the past.

“Ask all the men and women currently working from home whether they want to be there and the answer will predominantly be ‘get me the f**k out of here and back to work’,” he says.

“The reality is that most people are pulling their hair out working from home. People are social animals so they want and need to be around others. Also, the cost of rent as a percentage of overheads is actually quite minor compared to labour and wages so there aren’t massive savings to be made from giving up offices.”

Another industry veteran, Sean Mulryan of Ballymore, is more cautious, agreeing that the pandemic-driven shift to remote working could hit demand for offices.

"It will have an impact, but I don't think it will be as much as some people are saying," says Mulryan, whose group has built and handed over offices with space for 5,500 workers at the the Dublin Landings in the Dublin Docklands to tenants including Irish institutional property investor Iput and software multinational Microsoft in recent months.

“All of our employees that I speak to cannot wait to get back to the office. At the end of the day some people will work from home, but others like that contact with people that you get in the office.”

Ronan, who has been in an ongoing battle to secure planning permission for additional floors at Salesforce Tower in the Dublin Docklands, says that, if anything, companies are going to be looking for more space than previously.

“The idea of packing people in like a tin of sardines, well, that day and age is gone,” says Ronan, who was recently forced to apologise for a video filmed in South Africa in which he made light of coronavirus.

“Even before social distancing, the more progressive employers were beginning to realise that it was better to give people more space. Square footage per employee has massively reduced over time to the point that there was double the space 30 years ago than there is now. But some employers have been looking to bring back more square footage and that is going to multiply big time now,” he adds.

John McCartney, head of research at estate agency Savills, agrees there may be a need for additional space.

“Once we get to whatever the new normal is, it may well be that the average occupational density has to increase. At the moment, the average occupier has about 10.3sq m of space but this norm may well change.

“While social distancing along with potential bans on hot desking will be partly responsible for this, people will also be wary of being too near others for some time and will just want more room anyway,” he says.

While, for now, we may have had little choice but to embrace remote working, McCartney is also unsure how likely it is that most people will want to stick with it.

“This has been a great stress test for the technology and, by and large, it is one that seems to have worked,” he says. “However, the weeks of isolation may ultimately prove the necessity of having a focal point. There are plenty of things you simply can’t do as well remotely – take the immediacy of going over to a colleague to confer about something you’re working on. Or what about training? Both the formal and informal kind. Two younger colleagues share an office with me and I think they would say they pick up a lot of information by osmosis, such as hearing the way I deal with clients on the phone and so on.”

Aidan Gavin, managing director of fellow estate agency Cushman and Wakefield, says decisions about whether to reduce office space will likely only take place at a later date.

“What you’re going to see happen is that the way people and companies operate will certainly change . . . in the short term, this change will be dictated by Government policy on social distancing, with maybe only 50 per cent of the workforce allowed back into the office until a vaccine is with us,” says Gavin.

In an interview on RTÉ Radio 1 recently, Dublin City Council chief executive Owen Keegan confirmed that only about half of its workers would be able to return to its offices due to social-distancing rules and return-to-work protocols.

“Given this, companies will be forced to continue to have a significant percentage of their employees working remotely, although the situation will hopefully get better for those that are struggling with it as schools and creches open, and some people return to working as normal,” says Gavin.

He believes the standard office of the future will more resemble the headquarters of Google.

“When we get out of this in two years’ time, the shape and layout of offices will have changed dramatically.

“The co-working model as made popular by WeWork and others has meant that some people were getting as little as 6 or 7sq m each, which will certainly end. Rather than having an office with 1,000 desks, in future a company might only need 750, but will still need the same level of square footage,” he says.

“You’ll see more people adapting their workspace away from having rows of desks and focusing instead on more collaborative space with the overall function of the office changing to be one where people primarily go to collaborate with each other rather than working on their own,” adds Gavin.

Interestingly, he believes workers will likely be less concerned about conditions in their own workplace and more about how they will get to and from work. “This will probably lead to staggered starts and more people walking and cycling, so it presents an opportunity for the city to reimagine itself,” says Gavin.

John Bruder, managing director of Burlington Real Estate and former chief executive of Treasury Holdings which was one of the biggest commercial developers in Ireland before the 2008 financial crash, agrees that starting times will change as flexible working becomes more common.

He also envisages conventional offices being revamped to mirror those of leading tech companies, with more space given to collaborative working. Bruder notes, though, that the likes of Google have built such environments while also being proponents of remote working.

“The bottom line is that a large proportion of office space taken in Dublin over the past five years has been snapped up by those very organisations who you would have thought would be least likely to need it because of their promotion of flexible and remote working,” says Bruder.

“It is very telling that these companies are continuing to develop corporate headquarters centrally. This is, in part, because they want to attract young and flexible workers who want to interact and work together,” he adds.

With The Irish Times reporting recently that Microsoft is set to expand its Irish operations further with a planned move into new offices in the Dublin Docklands, tech companies are not going to disappear tomorrow. But they may seek to do things differently.

All the leading tech companies contacted by The Irish Times declined to say how many workers employed in Ireland are working outside of the State during the Covid-19 shutdown. Mary Connaughton, director of the Chartered Institute of Personnel and Development in Ireland, the professional body for work experts, says that, although this brings up a number of HR and tax issues, it could be something that becomes more commonplace.

“For some organisations it is pretty routine to have people appointed to jobs out of an Irish headquarters but who don’t actually live here, particularly at a senior level. It does bring up difficulties around tax and pensions but there are service providers who look after all of this.

“We will definitely see more companies considering hiring people who will stay in their home countries in the future because Covid-19 has undoubtedly shown the technology works,” she says.

For the companies, this also has the attraction that they do not need to allow for Dublin’s high living costs in setting remuneration packages.

Connaughton doesn’t expect the office to disappear anytime soon, but she forecasts that more work will be done outside of it. This may bring opportunities for those who have been wanting more flexibility from their employer, but also significant challenges.

“Covid-19 has meant we have moved to remote working without fully thinking through or addressing things. For example, the home environment was not designed for productive working, especially not when there are also children to look after.

“We will see companies recruiting more people solely as remote workers, but there will have to be mental health supports for those that may feel isolated and there will be other supports needed or else employees will likely carry the burden of extra expenses incurred such as heating, broadband bills and so on,” she says.

While co-working spaces have suffered a bit image wise in the wake of the WeWork debacle, Connaughton also envisages them potentially having a role to play for remote workers who want a sense of community.

Finian Buckley, associate professor of organisational psychology at DCU Business School, says research shows that those who opt to work from home and who receive the right supports typically outperform those working in conventional offices in terms of productivity. But he warns of people feeling they are missing out by staying home.

“We can Zoom all we want, but we still miss the interpersonal connection with others that you get from working together,” says Buckley.

“There are lots of positives from remote working, but those who do it often feel they don’t have the support of others because they may not see them as easily as you would in the workplace and there is also a concern about career progression and not being seen to be working well despite performing strongly,” he adds.

Suggestions about the demise of the office might be exaggerated but, according to George Boyle, an architect and founder of one of the State's oldest co-working spaces, Fumbally Exchange, we have to be careful what comes next.

“The office of the future must be flexible, dynamic and capable of a flip or pivot as our context continues to change,” says Boyle.

“We are so careful about viral spread in the online world and we need to be similarly engaged with the physical one. To not anticipate workplaces that are proofed against future pandemics is to go right back to the blind spot from which we all started,” she adds.