FOX CROSSING – The sparkling new $98 million Secura insurance headquarters office building opened with fanfare in October.
Secura leaders said the 300,000-square-foot office building “was amazingly worth it” and produced a “different feeling of connectedness and culture among the staff.” The building had enough space to add another 400 employees to the workforce of 750. It has balconies with views of the countryside, solar panels, a café as big as most restaurants and a full-size gym.
The views, the cafe, the panels and the gym are still there.
The employees, for the most part, are not. Since the state’s safer at home order was lifted in May, just 15% of Secura’s employees have returned to the office on a voluntary basis.
Emergency shutdown orders issued in mid-March to reduce the spread of coronavirus drove many Wisconsin office workers out of offices and into home offices and makeshift work spaces in their dining rooms, bedrooms and basements.
The pandemic spurred an instantaneous, mass movement into remote work. Wisconsinites’ return to office spaces won’t happen so suddenly, as individual companies have to weigh less-tangible details like corporate culture and collaboration, in addition to safety measures and their employees’ comfort with the idea of returning to an office.
In some cases, workers won’t be returning at all.
Take Wisconsin Public Service. The electric and natural gas utililty’s downtown Green Bay office complex was underused and in need upgrades to remain viable. When the pandemic struck, employees’ performance working from home convinced the company the time was right to close the office permanently, Wisconsin Public Service spokesperson Matt Cullen said.
Some employees will be transferred to other offices, including a service center in Ashwaubenon, but many will continue to work remotely.
“This was a culmination of a few different factors, chief among them that our employees have clearly demonstrated they can be efficient and productive working remotely, combined with the fact our buildings downtown had not been used for some time,” Cullen said. “Recent technology investments allowed us to make this transition and provide the same service customers depend on while working remotely.”
Nationally, Google, Facebook and Uber employees will work remotely until at least the middle of next year. Twitter and Square say their employees can work from home indefinitely. REI will never move into its new headquarters building in Bellevue, Washington. It put the building up for sale to stabilize finances upended during the pandemic, and its employees will work remotely or from smaller satellite hubs.
In Wisconsin, many employees and employers may not have ever considered remote work as an option before the pandemic.
“We live in Green Bay, Wisconsin. It’s a ‘you come to work everyday’ culture,” said Jonathan Webb, director of Green Bay-based KI Corp.’s workplace segment. “I call it the Midwest culture. It’s always been ‘come to work’ and we had not addressed the technology aspect.”
That changed quickly in March and April as companies across the state shifted people to remote work. According to the National Bureau of Economic Research, by April, more than a third of all U.S. workers shifted to working from home this spring, bringing the total number of remote workers to about half of the U.S. workforce.
KI, which makes furniture for businesses and institutions, shifted 500 employees to remote work, all while helping the company’s customers adjust on the fly to the pandemic.
“Our staff here did yeoman’s work in figuring out who needs hardware, accessories, issues making it work, how to connect to networks,” Webb said. “So many organizations shifted to work-from-home strategies that it’s become a huge topic of conversation for companies. Ninety-five percent of the companies KI works with had zero work-from-home policies in place.”
Imperial Supplies, also in Green Bay, moved 475 people to remote work in two weeks in March. CEO Rob Gilson declined an interview for this story because the company, a nationwide distributor of truck fleet maintenance supplies, continues to evaluate its future options.
In Menasha, Faith Technologies employees will be working remotely until further notice. In Sheboygan, Acuity Insurance has given employees the option to work from home or return to the office. About half of Acuity’s employees told the company they would come back to the office three days a week.
And in Appleton, Thrivent expects most of its 1,500 employees to work remotely at least through January.
A slow recovery
Manny Vasquez, vice president of business development for Appleton-based Pfefferle Companies, said it is still too early to gauge the pandemic’s impact on future demand for office space. He expects many businesses will return to office work, though there is no doubt some will shrink their office footprints for reasons that go beyond the coronavirus.
“Most companies understand that working from home is not conducive for some of their employees, so while they’re analyzing their space needs, they’re also taking into account the implications of requiring their entire workforce to work remotely,” Vasquez said. “Critical factors such as company culture, collaboration, social interaction, productivity and work/life balance are going to continue to drive demand for a physical office environment.”
The shift to remote work has contributed to a steep decline in office space deals and developments.
NAIOP, the Commercial Real Estate Development Association, has conducted monthly surveys of the industry that show industrial demand is recovering, but office and retail sectors continue to struggle, something Vasquez said he’s seeing on the ground in northeastern Wisconsin.
“Post-COVID, data centers, research and development space, disaster recovery operations, multifamily and the industrial sector – particularly warehouse, distribution and last-mile delivery services – will emerge strongly,” he said. “Office and retail will take longer.”
Hany Guirguis, a professor of Economics and Finance at Manhattan College’s O’Malley School of Business, and Tim Savage, a clinical assistant professor at New York University’s Schack Institute of Real Estate, co-authored NAIOP’s biannual forecast of demand for commercial space.
Guirgas said it could take another year, or more, for the demand for office space to recover.
“We are experiencing a strong drop in demand, followed by a gradual increase where the market might recover partially by the end of 2021,” Guirguis said. “However, we’re still entertaining the idea there might be minor, permanent damage to demand. Some might prefer to stay home and can still produce, at a lower cost (to their employer).”
Savage said the office space market was already evolving when the pandemic hit in response to technology, innovation and changes needed to attract and retain talent. He said companies considering considering expansions must weigh factors like the cost of adding or building office space, the benefits of in-person collaboration versus remote operations, long-term growth plans and the ability to provide employee perks.
Guirguis said the pandemic has created a “new economic environment” in which companies might be re-thinking long-term assumptions about growth and expansion. He said companies may watch for signs of progress on a COVID-19 vaccine and the results of the November presidential election before they determine if and when employees will return to offices and what changes will need to be made to work spaces.
“Once we’re done with the election and maybe done with a vaccine, then we hope to see the recovery speed up,” Guirguis said.
Vasquez said about 9.5% of office space in the Appleton area is currently vacant, and about 10.5% of space in Green Bay is vacant. The amount of unoccupied office space has been growing for several years, though Vasquez noted prime office space desired by many tenants remains a stronger segment of the commercial real estate market.
“Overall, we expect to see more office space becoming available in the near future but certainly not to the extent that other larger, more expensive markets will,” Vasquez said.
Paul Belschner, CEO of BASE Companies, has helped oversee the conversion of several former canning factory buildings in downtown Green Bay into new, modern office space at the heart of the Rail Yard District. He said there’s still interest, albeit a little more tentative, in available space.
“It might be with more flexible lease terms or companies thinking about expansions, but they’re not really sure when (it will happen),” he said. “A lot of dates have been pushed back as companies keep pushing their return to the office dates out further.”
The new office
Vasquez expects more companies to embrace giving employees the option to work remotely, in the office, or to split their work weeks between the two. He said it adds flexibility that employees seek at a time when 43% of employers say they expect the availability of their workforce to be reduced this fall due to child care needs as a result of many Wisconsin school districts offering only part-time or no in-person instruction.
“Rather than choosing one or the other, companies are providing their employees the option to work in the office or from home,” Vasquez said. “We expect this need for flexibility to continue since personal preferences, home and family dynamics, and health concerns vary among employees.”
Webb said most companies that KI works with on office design and equipment have not abandoned their offices, but instead have sought ways to adapt their spaces to meet safety and sanitation guidelines while also providing functionality that will last beyond the pandemic.
“We have a menu of options from Plexiglas screens to full-size whiteboards that we bring to our clients so that when they pandemic goes away, which we hope it does, they will be able to use them for other areas of engagement and collaboration,” Webb said. “We have a lot of clients who were all in on the open workplace … no barriers, wide open … and now they have to figure out how to increase barriers.”
Webb said a lot of KI customers are getting close to making a decision about how to return to the office, though that varies depending on where individual states are in their efforts to reduce the spread of coronavirus. He said companies should think about their culture and solicit input from employees as they consider changes.
Secura sees maintaining its company’s culture as a key piece of the puzzle even if employees are home alone for a lot longer. That means it encourages virtual team lunches, video messages, online trivia sessions and photo challenges.
For those who have returned to office work, Secura requires social distancing and masks, has implemented more cleaning and sanitizing through the entire building, made some rooms and areas off limits and installed a building-wide air purifier that kills airborne viruses.
“Keeping our associates safe is our top priority,” said Secura CEO Dave Gross.
Contact reporter Maureen Wallenfang at 920-993-7116 or email@example.com. Follow her on Twitter at @wallenfang.