Envio in the Media

Disruption, Complexity, & Consolidation: The Workplace in the COVID Era

By August 4, 2021 No Comments

by Memoori

“The age of remote work is upon us,” they say. After almost 18 months of lockdowns, stay-at-home orders, and workplace safety policies that have prevented the vast majority of workers from going into the office, employees and employers have learned to accept remote work. As the pandemic rolls on around the world, remote work is evolving from a necessity during the pandemic to increasingly feel like a distinctly new era for workers and the workplace.

While remote working trends were emerging before the pandemic, they were gradual at best and still faced widespread dismissal from traditional business. Before the pandemic 47% of employees in the US had never tried remote working, now that’s 34% just 18 months later. Even more telling, just 17% of US employees had worked remotely for 5-days per week before COVID-19 but a massive 44% were working from home 5-days per week in April 2021 according to Statista research by Kimberly Miltz. The change is even more significant in many European countries where lockdowns were longer and stricter than in the US, but all over the world the concept of remote work now takes new meaning.

“The virus has broken through cultural and technological barriers that prevented remote work in the past, setting in motion a structural shift in where work takes place, at least for some people,” reads a McKinsey insight study. “More than 20% of the workforce could work remotely three to five days a week as effectively as they could if working from an office. If remote work took hold at that level, that would mean three to four times as many people working from home than before the pandemic and would have a profound impact on urban economies, transportation, and consumer spending, among other things.”

Perhaps the biggest impact of the rapid shift to remote work will be on workplaces themselves. Whether applying hotdesking or fixed desk approaches, most companies still maintained office capacity for nearly everyone in their workforce. As employees return to the workplace after COVID they will find they have a lot more space than they used to, with a significantly larger percentage of people working from home. While this additional space will initially be necessary for social distancing, these public health policies will slowly disappear but remote working probably won’t, leaving masses of costly excess office capacity around the world.

“Forced into an extended remote working trial, employees have become comfortable at home, and businesses around the world now realize what is possible with a predominantly remote workforce. The pandemic will come to an end, albeit gradually, and the physical workplace will return, but not in the same real estate market as entered the crisis,” explains our March 2021 article. “Companies will apply greater levels of remote work in their business models and require less physical space, this will lead to consolidation of office buildings and greater emphasis on the quality of remaining buildings.

“Before the pandemic, occupancy was predictable. Offices were expected to be full during operating hours of 9-5 and empty overnight and over weekends. Depending on the purpose of departments, those spaces could be assumed to be at full capacity like the engineering department or at half capacity for sales teams,” explains Envio Systems in a statement on their space optimization integration partnership with VergeSense. “As we return to the office or begin to figure out what it looks like, one thing is certain: Occupancy is no longer a constant between hybrid work schedules.”

The pandemic caused the disruption, the emerging flexibility of hybrid remote work models adds complexity, and the ongoing need to reduce costs brings the motivation to consolidate significant amounts of office real estate. The real questions for companies are how they decide how much space they need and how best to use that space for greatest efficiency and productivity. The truth, however, is that these were the same questions we were asking ourselves before the pandemic, not just because of the emergence of remote and flexible work but also because of our highly inefficient use of office space.

“In the US alone [prior to the pandemic], there were 10.9 billion square feet of leased or owned corporate real estate but as much as 4.4 billion of that is vacant and paid for. Every year, US corporations spend $250 billion on space with nobody in it, and it’s not that they don’t know they have this problem, they know. It is just that they can’t agree on which 41% is vacant and paid for, and which is actually being used. So they make decisions anecdotally,” Andrew Farah, CEO of space analytics provider Density, told Memoori in a 2020 interview.

“As a result, every large corporation in the world is going to be looking at their real estate, to consolidate the space that they don’t use and to invest in the space that they do,” Farah continued. “Any sufficiently large player in a sufficiently large industry will have tens of millions, if not hundreds of millions of square feet of space. At that scale, there is simply no way that you can see how all of it is used in real-time, anecdotally. You just can’t make decisions about 75 million square feet of space without actual data on its usage.”

Now more than ever, buildings need visibility to understand how their spaces are being used and how they can adapt to the new work landscape they find themselves in, and this is driving the huge growth in the occupancy analytics market. Our 2020 report estimates that the Occupancy Analytics market in Commercial Office Space achieved systems sales of $2.17 billion in 2019, rising to $5.73 billion by 2024, and presenting an impressive CAGR of 21.5%. These sales are built on services that enable space optimization and efficiency in line with human-centric goals, as well as people finding, asset tracking, and a number of other location-based applications.

“With office densification rates increasing across the world, combined with evidence of poor space utilization and the expectations of occupants for more human and productive environments, the need for workspace management platforms to provide better insight into the repurposing of current workplaces has never been so urgent,” states our recent report. “We expect this new space for occupancy analytics and indoor location services to become a critical element of IoT driven solutions in Smart Buildings that will drive efficiency and transformation in the workplace.”