Land Values: Employers are mandating the move back to the office with customizable approaches

When Roz McQueen recently decided to re-design the office space her company had available for lease in the Mount Pleasant neighbourhood of Vancouver, she went looking for a different kind of feel. More like, well, home. A big kitchen and island. Banquette seating. An area for entertaining—something like a hospitality zone. She still imagined some desk-type pieces of furniture and the usual office basics. But with extras.

“We’re really taking a page out of the residential playbook,” says McQueen, the head of leasing for Vancouver-based Nicola Wealth Real Estate. That kind of approach—and level of investment—is part of the company’s new strategy of developing “turnkey” offices for fledgling companies that have grown beyond work/share spaces but don’t yet have the capacity (time, expertise, clout to negotiate with contractors) to tackle a big design-build-find-the-furniture empty space themselves.

Nicola’s “we’ll do all that for you” strategy is just one of the experiments going on in the office-space world, as the Great Pandemic Work Rethink continues to tumble through its evolutionary stages.

Besides the turnkey idea, which has attracted tenants to Nicola’s Mount Pleasant offices ranging from a small California tech company to a luggage manufacturer to a luxury lighting store, there are many other new attempts of embracing the new work world, with no clear winner. “I’ve been doing this for 27 years and the trend right now is that this is the first time there is no trend,” says Colin Scarlett, vice-chair at Colliers International Canada.

One small subset of employers, often very small businesses whose work products exist in the ether, is perfectly fine with letting their workers take on the $20-to-$40-per-square-foot cost of creating and maintaining an office space. Those “work wherever” companies have no central workplace, or barely one, while their (often young) employees are scattered around the region, working at their kitchen tables or in shoehorned bedroom offices.

At the far other end are the big companies (and the federal government) simply demanding some level of physical presence, like it or not, in the big old office. As a February Colliers Canada survey found, managers in general favour in-person work or hybrid work at a significantly higher rate than their employees. “Managers are twice as likely as employees to prefer a fully in-office work environment,” the survey found. “Consistent with our past surveys, 62 percent of companies surveyed will operate under a hybrid model of work, with 34 percent of companies saying their workforce will be fully in-office and four percent fully remote.”

(And, I just have to point out, this whole work-from-home-or-not thing is applicable mainly to a highly select, magazine-reading, probably-latte-drinking group of employees. A February U.S. Bureau of Labor survey showed that 77 percent of all employees do no teleworking at all. You know, those people who can’t administer an IV, serve you a burger, unload a container from Shenzhen, clean your hotel room or teeth, replace your hip, weld a robotic joint or repair your car via Zoom. The WFH debate is also not a thing in Asia, where the commute to work never really went away, or in Europe, where everyone is very much back to the office.)

Then, in the middle, there is a hothouse of blooming variations as employers try to figure out what they can do to ensure there is some in-person face time among employees.

“They’re pushing hard to get people back,” says Scarlett. “They’re telling me, over the long term, you can’t schedule a Zoom call to innovate. One client says innovation is down 50 percent.”

One of those pushes is the effort by employers to lease or create the kind of central city office spaces meant to seduce employees into wanting to be there, with cool hang-out spaces, proximity to interesting downtown-ish activities, and hip design. Like what Nicola is doing with its turnkey spaces in the Mount Pleasant industrial district and elsewhere, or what other major office-space owners are trying to create in and around their large buildings.

Another option that’s emerging: Yes, work in an office, but it will be a lot closer to the suburb where you’re living. There will be some attractive add-ons: gyms and lounges and coffee shops and daycares. But one of the biggest perks that the downtown offices can’t always guarantee: easy commuting and easy parking. No hour-long journeys from home to the central business district or $30-a-day parking charges.

That’s something that other office providers are trying to get ahead of. The giant work-share company International Workplace Group (far bigger and far less troubled than WeWork) has opened multiple offices in small towns and suburbs in the last couple of years, ranging from Chilliwack to Vernon in B.C.

Managers want their employees to be able to connect and are willing to come to them to do that, says IWG’s Canada manager, Terri Pozniak: “It’s very difficult to build company culture digitally. And culture is critical to the success of a company. You feed off each other.”

IWG now has 29 locations in the province, with four in Surrey, three in Burnaby and two in Langley, among others. It has maintained its downtown Vancouver centres, but the growth is elsewhere.

The suburban offices are organized in a variety of ways to suit the likely subset of tenants. One location in Surrey is filled with translators, immigration consultants and psychologists, while another location caters to larger team space requirements for engineering firms, tech companies and construction project teams.

That move to the suburbs is showing all the signs of becoming a baked-in pattern. The most recent data from TransLink, the Lower Mainland’s transit agency, shows that transit ridership is booming in the suburbs. It’s at 123 percent of pre-COVID levels in Surrey and Langley and 111 percent in Maple Ridge/Pitt Meadows. In Vancouver and Burnaby, meanwhile, it has recovered to only 72 to 76 percent of former ridership. (Don’t be deceived, though: half of the million or so daily trips in the region are still in the central area.)

The Colliers survey, aimed at sussing out developing trends, also noted that there are a lot of small businesses in the office markets outside of downtowns and small businesses were half as likely as big international businesses to say they favour hybrid work over full-on in-person. They also were more likely to say they were going to continue to lease the same amount of space. “The higher reliance on office space and shorter commute times for employees at small businesses are contributing factors to the difference in the effect of hybrid work between primary and secondary markets,” the report concluded.

There will be many more reports, surveys, analyses and experiments to come as everyone tries to navigate the changing world.

It’s going to fluctuate over time. Employers get to insist that employees come in to the office when unemployment is high and people feel like they don’t have a lot of negotiating power. That approach doesn’t work so much when unemployment is low or when the employees are in a high-demand field and can walk away any time to an employer who gives them the freedom to live wherever they want.

Both McQueen and Pozniak say that, for now, the employees are still holding the steering wheel. “But when the labour market changes,” says McQueen, “there [will be] more of a stick to get people back.”

She’ll be watching to see if the tide turns, as will millions of others.