Going to work for many Sioux Falls residents means opening their laptop from home, not driving to the office as coronavirus cases continue to climb across the state.
Reggie Kuipers has watched the national “remote work” trend affect the local market, one he follows closely for his own job.
A broker for Bender Commercial Real Estate, Kuipers specializes in office space. He’s tracked the increase in office vacancies across Sioux Falls since the pandemic began.
“In the short term, in the 12 months, people are going to overreact to this,” Kuipers said. “Then they’re going to realize we have no synergy, we have no professional development, we have no fresh ideas.”
Office vacancies have increased in the first half of 2020 in Sioux Falls because of COVID-19, according to Bender’s mid-year Market Outlook Report. But the reaction from businesses, along with help from technology and innovation in office design, have prepared Sioux Falls office workers for a new kind of future, if and when things return to normal.
Kuipiers is confident that will happen. It’s just a matter of time, he said.
Finding some flexibility
The coronavirus pandemic created major ripples across South Dakota’s economy when it arrived in the state in March, causing local, state and national leaders to take measures intended to protect the public.
Social distancing and public health guidelines, along with some local regulations, caused financial hardship for many businesses, forcing them to furlough workers and close their doors to customers – a move that, for some, led to permanent loss.
About 90 percent of coronavirus-related job loss nationally came from industries and businesses that could not facilitate remote work, according to a study of federal data by the Pew Research Center.
For those that could send their employees home, the coronavirus forced them to find new ways to communicate and make attempts at team-building and professional development.
In the first half of 2020, office vacancies in Sioux Falls have already ticked up by a percentage point, including roughly 146,000 square feet of tenant-occupied office, according to Bender.
The mid-year vacancy rate of 11.2 percent is by no means a record for Sioux Falls, which experienced vacancy rates as high as nearly 16 percent in 2010 or almost 12 percent in 2018.
Brienne Maner is the executive director of the Zeal Center for Entrepreneurship. Her group runs an incubator and office space for small businesses in northwestern Sioux Falls.
Maner has noticed a shift in how small business operators feel about their staff working from home as the pandemic continues to force the matter.
“They’ve been pleasantly surprised with how productive they’ve been with their team going remote,” Maner said. “I know there was a lot of anxiety with that at the beginning.”
Experity, one of the biggest leasers of downtown Sioux Falls office space, has even been hiring people remotely during the pandemic.
The tech company merged with DocuTap in 2019 and has continued to keep a strong and diversified workforce across two floors of The Plaza, the multi-story office building at 101 S. Phillips Ave.
With nearly 200 local employees, Experity is hiring for at least 30 positions, including software developers and jobs in revenue cycle management, according to chief of staff Joe Goken.
It’s a change from how things were done in the past, Goken said.
“For the most part we did not hire remote employees,” he said. “Today we’re a little more flexible on that.”
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Team-building still important
While construction slowed years ago on what people might consider traditional office space – large, multi-level, multi-tenant buildings near the center of town – there has already been progress made on alternatives.
Developers have continued to build standalone office buildings along the outskirts of the city. They are smaller, often owner-occupied and less likely to be multi-tenant, Kuipers said, which means they are also less costly to build.
“So many of us have a rural background and we just have this owners mentality,” he said. “We don’t want to light that money on fire every month and throw it away.”
In terms of layout, however, Kuipers expects employers to turn back the clock a bit.
Before COVID-19, there was a strong urge for open offices with shared workspaces and fewer walls.
“More people in less space,” Kuipers said.
As businesses start to bring their staff back to the office, there’s a good chance office design will favor more dedicated working spaces and “walls up” to promote social distancing, he said.
Companies still have a strong interest in reclaiming their offices – even a tech company such as Experity. Goken said his company has continued to maintain the two stories it occupies downtown so its ready when employees return in full force.
“We’re probably a little bit more open to the work-from-home circumstances,” Goken said. “But the power of the team working together is pretty important.”
Returning to leased office space doesn’t mean abandoning the home office.
Maner expects remote work to be more than temporary trend. A much as the experience of coordinating workforces remotely has opened the eyes of management, it’s also made it more comfortable for staff.
“A lot of people feel guilty when they ask to work from home,” Maner said. “Since the pandemic, I feel like there’s a lot less guilt because this is what we have to do right now and you’re learning that it’s OK.”