By Meghan Hall
The office is now facing a similar situation that brick and mortar retail began dealing with in 2017: people no longer feel compelled to use their corporate spaces to accomplish their work. As the world returns to normal and the impacts of the pandemic moderate, the office is being left behind, according to a report by Kastle Systems. Retail has grappled with this issue in a variety of ways, the most important of which is to create unique experiences. For offices to be successful, they will need to do the same according to Kastle. The Registry spoke with Kastle’s CEO Haniel Lynn on its most recent analysis of the market and what the future holds for the office.
Kastle Systems has been collecting data on commercial properties post-COVID-19. Can you talk about the “Back to Work Barometer,” and what it represents?
We developed the Back to Work Barometer to provide insights into how different cities were returning to work. It compares weekly credential use from Kastle’s access control systems in commercial office buildings to a pre-pandemic baseline across 10 major metro areas. The Barometer offers insight on regional differences as well as how various pandemic and economic trends overlap with and affect ongoing office occupancy.
How did the idea to create a Back to Work Barometer come about?
Kastle has long provided data and insights for our customers at the portfolio, building or individual space level to help them better manage their facilities. Our centralized, cloud-based architecture makes it easy to gain insight across multiple locations, which adds tremendous value for portfolios trying to create an operating platform for all of their properties. When the pandemic started, we saw an opportunity to use our data for good, looking at similar but wider cuts of the data to help inform not only our customers and the industry but a much broader audience, since busy commercial offices are central to the health of our major metro areas.
What is Kastle Systems’ process for compiling data?
Kastle anonymizes and summarizes daily credential use across installed systems by metro area. These daily summaries are used to create a weekly average, which is then compared to a pre-pandemic baseline created in February of 2020. The Barometer reflects the ratios of current weekly averages to the baseline average across the 10 major metro areas with the most Kastle coverage. These ratios show the trends of office occupancy over time.
The data shows that many aspects of life have returned to normal, but life hasn’t returned to the office. From your perspective, what are the implications of this data?
If we take out some of the fits and starts of return to work because of delta and omicron variants, there’s an underlying shift in the way people work. One such shift is that the numbers reflect the reality of hybrid working. There has been a wide-scale adoption of remote working and in an employee-favoring jobs market, many employers are hesitant to demand people return to the physical office.
The other part of this is that the sectors (like restaurants, entertainment venues, and travel) that are outperforming the office market are places that people actively want to get back to being in physically. Offices need to adopt experiences (largely supported by technology), that make the workplace somewhere people want to go, rather than a place they are obligated to go.
Kastle Systems states that lack of office usage is more than just an issue of health and safety. What are the biggest reasons that office usage has stalled out, especially when compared to other property types?
What we’re seeing is that places where people are having fun are faring better–again, sporting events, restaurants, travel, etc. Data does show that most people prefer some form of hybridization of the workplace, so there is a desire to be back in the office to some extent. To get more people back more frequently, though, employers and building owners need to focus on how they can make offices more productive and empowering spaces.
Do you think the industry can overcome these challenges? If so, what needs to be done in order to get the office sector back on track?
Health and safety is paramount, but as we’re seeing, this isn’t the only consideration. Offices are in general safer than restaurants, nightclubs and theaters. Yet, these spaces are faring better than workplaces.
Collaboration and connection are still important though, which is why people are coming back together in other parts of their lives. We are seeing a shift from the work norms of the past century. We need to reframe this conversation outside of the fear of a global pandemic. While employers should continue to listen to their people and be flexible, businesses also need to lead people back to the workplace–and a big part of this is giving them a reason to want to be back.
There is no one-size-fits-all solution, but experiences and culture are key. As an example, trophy class or Class A+ offices are performing better than others right now in this “flight to quality,” and what these offices offer that others don’t are technology-forward, frictionless environments that empower productivity. People want the same tech-enabled experiences where they live and work that they have in all other parts of their life. This is something that all commercial building owners and employers should be considering as they strategize.
Were there any results in the data that surprised you? Why or why not?
The relative enthusiasm for stadiums, theaters, nightclubs and similar spaces was somewhat surprising, given the health and safety concerns that kept people away from offices. People have quickly become more accustomed to working from home or a hybrid schedule and they’ve accepted it as the normal after more than a century of spending Monday to Friday in the office. The implication is that people are creatures of habit, yes, but those habits can shift quickly. It also suggests that employers and asset managers have some work to do in being proactive about bringing people back.
Based on the numbers, how do you think office usage will evolve in the future? Why?
It’s unlikely that hybrid work is going away in the foreseeable future, so offices will become primarily spaces for collaboration and socialization. Additionally, offices will increasingly become digital-first environments, by which I mean that the offices that thrive in the new paradigm will be more frictionless–whether it’s access, logins, space booking, screen interfaces or remote conferencing, these capabilities need to be readily available and easy to use.
Is there anything you would like to add? Or anything that we should be asking?It can’t be stated enough that technology will play a central, critical role in the long-term viability of the office market–for owners, operators and employers. This is creating new opportunities for owners and facility managers to be more active partners in the success of their tenants, while tenants can benefit operationally. Additionally, tenants can benefit from co-branding opportunities that come with working in more sustainable, digital-first workplace environments. Technologically empowered environments are helpful for talent retention and acquisition, as well as for promoting firms’ images as modern brands. Technology that is comprehensive and drives great experiences is perhaps the market differentiator for the foreseeable future.