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At its Amsterdam office, commercial real estate services firm Cushman & Wakefield has developed a prototype office layout that helps employees stay six feet apart as they go about their workday. The new design concept, called 6 Feet Office, guides employees in a social-distance formation through everything from entryways to elevators to open-office desk environments.

The new design is just one example of the coronavirus pandemic’s impact on the global workforce. An office layout like the one Cushman & Wakefield developed requires a lot of room to maneuver, which begs pressing questions for businesses that are currently paying for office space while employees work at home.

How the pandemic is affecting businesses

The coronavirus is accelerating the pressure companies have long felt to operate efficiently and cut costs. 

Many have been forced to operate in new ways — asking employees to work from home on short notice, and implementing new rules and procedures for those who do need to keep coming to the office. All this change can add costs as businesses bring new digital tools online to enable telecommuting and continue paying for office space their staff is not using. 

Meanwhile, revenues are plummeting. Businesses are bracing for consumer spending, which makes up two-thirds of U.S. economic activity, to decline by as much as 41% in Q2 2020. It was common for U.S. small businesses to be undercapitalized even before the pandemic hit, which leaves many struggling to stay afloat as the economy stalls. 
    
A survey of U.S. small businesses published in early May showed that more than half of these businesses were not comfortable with their cash flow. At the same time, credit is becoming more difficult to access; major lenders such as JPMorgan Chase, Bank of America and Capital One are raising lending standards, including requiring higher credit scores and more income documentation. Alternative online lenders such as OnDeck, LendingClub and Square Capital are following suit. 

Reevaluating your office space in light of COVID-19

One of the biggest changes many businesses are making is having employees telecommute. According to the survey published in May, 20% of U.S. small businesses had employees start working from home, and 17% had changed their retail operations to be more virtual. 

In another survey, more than a third — 34% — of U.S. workers who used to commute to work in the pre-COVID-19 era reported that they were telecommuting from home by the first week of April.

Work-from-home employees are most widely present in professional services businesses, with 34% of these companies reporting they have transitioned to telework, compared to 12% to 16% of those in other sectors. Professional services businesses and those that make digital products, such as software companies, are particularly likely to be able to serve their customers using a fully remote workforce. 

Enacting this new way of working is making managers and executives take a second look at the costs and configurations of their traditional office space. They may well see reducing the amount of office space they maintain to be a better way of cutting costs than laying off staff or reducing their hours or pay. 

Another reason that office space may seem more like a liability than a benefit is that these communal spaces are conducive to the spread of infection. Aggregated research from around the globe indicates that office environments are responsible for around 16% of flu transmission, and we know that the novel coronavirus is more contagious than the flu. 

It’s no surprise, then, that many companies with plans to keep an in-office team are reconsidering the configuration of that office space. For example, many are redesigning their open-plan setup, reverting to cubicles to keep barriers between employees. 

The entirety of an office layout must be considered when planning for social distancing. How can people traverse the office safely? What about entering and exiting, and riding the elevator? As Cushman & Wakefield discovered, keeping employees safe in an office space takes careful choreography.

A social-distance office situation will require more floor space than the previous cheek-by-jowl layout, meaning that companies must invest in larger offices if they want all their employees to work on-site. 

With all these factors to consider, businesses may decide to reduce office space for the near-term, if not for the foreseeable future. 

What to consider before downsizing office space

Here are some questions to ask yourself before you make a decision about whether to change or maintain your office space during this tumultuous time. 

  • Can you get a rent break or refinance? If you want to keep your current office, ask your landlord if you can get a break or a delay on rent payments. If you own your office space, ask your lender about the wisdom of refinancing, a process that could lead to lower payments and more cash flow. Just make sure to factor in appraisal and closing cost fees when assessing if this is the right move for your business. 
  • Do you want to get rid of office space altogether? Becoming a successful distributed workforce is about more than setting up remote desktops and other digital tools. Strategies for managing employees and promoting company culture when workers are all over the country and the world are necessary to maintain a cohesive team. Are you up to the challenge? 
  • Can your employees work from home for the long haul? Moreover, do they want to? The answers to these questions aren’t a given; it’s important to ask your employees how they feel before you make your plans. The last thing you want is a team of disgruntled employees in exchange for your reduction in rent. 
  • Will you need to redesign the office space you have left? If you don’t decide to become a fully distributed team, you’ll still have some amount of office space to make into a safe workplace for employees that need to be on-site. How much space and what layout will you need to make sure social distancing is possible?
  • Will your office-space cuts be temporary? If you decide that the survival of your business depends on reducing your office space, it’s obviously a good decision. But before you give the go-ahead, think about whether you are likely to revert to your previous floorspace once all this is over, or whether the cuts should be permanent.

When you should opt for a new space

While many companies are realizing the ease with which their staff can telework, other businesses may be drawing the lesson that having all their employees together is of particular value.

If that’s the case, then even if you have to cut back or amend your office space temporarily to make ends meet, consider moving to a new space with a social-distance configuration as soon as you’re sure your cash flow can accommodate it for the long-term.

About the Author(s)

 Ting  Pen

Ting Pen is a ValuePenguin Co-Founder. She previously evaluated corporate mergers and acquisitions as a Financial Analyst at Citigroup. Her experience in financial services combined with her entrepreneurial spirit allowed for her to start her own fin-tech company. Her passions lie in problem solving, growth, and travel.

Co-Founder, ValuePenguin.com
Thinking of Downsizing Your Office Space Post-Pandemic? Here’s What You Need to Know.