January 17, 2025 • 30 mins
The Covid-19 pandemic caused a massive shift in the way companies and employees view the traditional office and America tripled the number of remote workers according to a report from the U.S. Census Bureau. Remote workers are pushing back against returning to the office and as a result, the office of today - and tomorrow - is one that will need to be more suited to the worker than it was in the past. We're talking to Marc Selvitelli, the CEO of NAIOP which is the Commercial Real Estate Development Association, to learn how employers will need to put a greater focus on wellness, amenities and comfort, while facilitating meetings with workers who are offsite to enable collaboration and networking.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:05):
Welcome to Virginia Focus. I'm Rebecca Hughes of the Virginia
News Network. The COVID nineteen pandemic caused a massive shift
in the way companies and employees via the traditional office,
and America tripled the number of remote workers. According to
a report from the US Census Bureau, remote workers are
pushing back against returning to the office and as a result,
the office of today and tomorrow is one that will
(00:27):
need to be more suited to the worker than it
was in the past. We're talking to Mark Selvitlli, the
CEO of NAIOP, which is the Commercial Real Estate Development Association,
to learn how employers will need to put a greater
focus on wellness, amenities, and comfort while facilitating meetings with
workers who are off site to enable collaboration and networking.
(00:47):
Welcome to the show. I'm so glad we could talk
today about the redefinition of our workforce, as remote workers
are kind of rejecting the whole going back into the
office thing. Why don't you go ahead and start by
telling us what makes you qualified to talk about this?
Speaker 2 (01:08):
Sure? Well, thanks for having me, Rebecca. I work with
the Commercial Real Estate Development Association and we represent those individuals,
the owners, investors, operators of office buildings, among other commercial
real estate classes. So you know, obviously we have a
very deep vested interest in, you know, how the space
(01:30):
is utilized, who's utilizing it, when they're utilizing it. So
we look at it very carefully about, you know, how
the return to office is going since we've come out
of the pandemic a few years ago.
Speaker 1 (01:43):
So when't we start by talking about that, like what
have you seen as far as the changes pre pandemic
versus post pandemic?
Speaker 2 (01:53):
Yeah, and I'm glad you worded it that way, because
when we look at the pre pandemic, I think we
can all say that, you know, how the work was there.
We were already on the trend towards telework, if you know,
it wasn't already happening with at least a day a
week for most individuals. And we went from maybe doing
that one day a week to, of course, as we
all remember or maybe want to forget, doing it every
(02:16):
day of the week. But as we thankfully emerge from
the pandemic, you know, there was definitely still a reluctance
to go back. But that did change, and I think
Rebecca some of the reason we saw that wasn't just
that employers were saying, you have to come back in.
What we found through you know, studies that we've seen
(02:36):
in the industry from what we're hearing, you know, even
what I'm seeing with my own team, is that, you know,
humans are social creatures, and when we are in our
home office day in and day out, we don't get
that collaboration and interaction that we need. I mean, there
are some jobs where that's probably applicable, you know, they're
(02:58):
they're completely contensed in a screen, locked up in their
home office. But for the vast majority of jobs, people
need that interaction and that collaboration and the entrepreneurship that
comes out of that. And I think that that's brought
us to where we are today, which is most companies
are back about three days a week, and I think
(03:19):
that that's probably the model we're going to see moving forward.
Speaker 1 (03:23):
Okay, I can say that, you know, I'm I was
a remote worker. I actually was in office during a
large part of COVID as one of the few that
was in office to kind of monitor the servers in
case something went down. But I've been remote ever since.
And now there's that push back into office, which is fine,
(03:47):
But I feel like a lot of remote workers would
say what I'm about to say, which is, yes, there's
a part of me that missus seeing you know, my
co workers day in and day out. But we learned
during that process how to collaborate through things like teams
and zoom, and I don't I can only speak for
(04:09):
me at this point. I don't feel like I'm missing
any of that because I can do a quick call
through one of these mediums to a coworker and we
can chit chat or we can talk business, you know,
or both. Of course, my job is one that is
you know, I'm sure there are other jobs that require
(04:29):
that that collaboration more of a hands on kind of thing.
How much pushback has there really been? Is it a
vast amount?
Speaker 2 (04:39):
Yeah, you know, I mean it may depend on from
industry to industry. But again, what we've seen, you know,
really taking a look at this and taking a look
at industry studies, is that people generally speaking, you know,
the surveys have said they they don't want to be
working from home every day, that they do want to
be in and you know, e three day seems to
(05:00):
be that magic number on that. But to your other
point too, I think it's important to discuss about that
collaboration that comes from it, because certainly, you know, we
didn't all stop collaborating and creating when we worked from home.
But I think what we've found is that there's a
more organic collaboration that takes place when you're in person.
(05:24):
You know, I can push a button right now and
try to talk to one of my colleagues by teams,
but there's no guarantee that they're going to pick up
or I don't know that they're busy. But if I
have a sun an idea and we're both here in
an office space and I can walk down the hall
and they see that, I'm you know, kind of excited
and gleeful, like they need to talk. If they're busy,
(05:44):
maybe they're going to stop what they're doing. If they're there,
you know, we can we can have that conversation, let
that idea already begin to germinate, and you know, I
do think that there's a real positivity that that comes
out of that, and that moment isn't lost. And I
think what we also see too, and perhaps we can
talk more about this, but I sometimes think that this
(06:06):
gets overlooked, and that is the learning bios mosis. You know,
when you're in an office space, you hear things, whether
I'm directly engaged in that meeting or not, I can
hear my colleagues or my supervisors are talking about because
it's just kind of that background noise and you learn
that way. And you know, there's some real concern about
(06:31):
young professionals right now, and this is concerned that they've expressed,
you know, are they learning as much as they need
to by not necessarily being with their supervisors and or
peers on a regular basis.
Speaker 1 (06:46):
And I'm glad you brought up the younger group because
that was going to be one of my questions. You know,
we've seen recent studies talking about how some of the graduates,
I want to say, from you know, twenty twenty four,
the spring of twenty twenty four, they are having all
kinds of trouble keeping a job. They may have been
(07:08):
able to get a job, but they aren't able to
keep it. And a lot of the complaints are that
they don't understand, you know, the etiquette of being in
a workforce, you know, and these types of things. There's
also something to be said though for this younger generation,
they don't want to be saddled with an office. They
(07:29):
love the idea of remote work so they can travel
and they can enjoy life before having the responsibility of
kids in the house that kind of keep you in
a stagnant place. How do we balance those things?
Speaker 2 (07:43):
And I think you're seeing that equilibrium coming into play
right now between employers and employees. Most companies, you know,
have their teams back about three days a week, and
you know, it's it's recognizing that and it's not just
the younger employe, you know, it's really looking at all
of them. But you know, again, I don't think your
(08:03):
point's wrong. We're younger employees. That work life balance is
more important to this generation that's coming into the workforce
than it was for earlier generations. And you know, with
being in three days a week, I think that employers
and employees are finding that balance that that addresses giving
them the opportunity to you know, work remotely more than
(08:26):
certainly I did when I came into the workforce far
too long ago, but also still getting that desire from
the employer to have people there where they can. You know, again,
I think be a real contributor to the entire organization.
Speaker 1 (08:43):
I like that answer. So what does this mean in
regards to real estate, because I know in the height
of the pandemic, there was discussion that office space, we're
going to have more of it than we need. You know,
companies aren't using it. They're not going to continue to
pay rent or whatever on these spaces. Oh no, what
(09:07):
are we going to do now? Now we've got this
three day a week pushback into office, But a lot
of times, because it's only three days, that still means
you don't have a full staff in the office and
you don't need as much space. So what does that
look like.
Speaker 2 (09:22):
Well, it isn't necessarily they don't need as much space.
And we're starting to get data now because we're starting
to see more and more lease renewals take place. And
what a lot of companies are doing is they're repurposing
the space they have, so they're not necessarily downsizing. I mean,
we do see that. Don't get me wrong. There are
some that are downsizing, but you're also seeing others that
(09:43):
are taking more space. But what they're doing is utilizing
the space differently in that you know, this is you know,
we all I think most of us remember at some
point the late nineties movie office space, you know, just
one big cubicle farm, and you know it was rightfully
derided as kind of being this dreary place. But what
(10:05):
you're seeing now is a lot of spaces that are
being developed to foster that collaboration that I was speaking
about earlier. So a lot of huddle rooms, workspaces, workrooms,
and it's not just your traditional boardroom. It isn't you know,
this big, long, oaken table with chairs all around it.
Now you're talking about spaces with whiteboards and couches and
(10:26):
throw pillows where it kind of makes it feel a
little bit more like home. Are certainly you know, a
little bit more comfortable than a cubicle. And that's how
they're using these spaces. And it's also a difference what
you're seeing in the building as a whole, where you're
seeing a lot of landlords now take some of their
existing space and repurpose it, repurpose it into fitness centers,
(10:50):
game rooms, bringing in shops or cafes or daycare things
that are important to a lot of employees. And that
is what we've heard from, you know, people that are
going into offices you know, this is what I want
to see, and I think you're seeing the development community
respond to that.
Speaker 1 (11:10):
Okay, I like that answer too. I know one of
the other main concerns of people when they do have
to return to office is you know, they want a
wellness and a mental health support. You know, we go
online and we see these videos a little short clips
or whatever from Japan and they have nap pods and
(11:32):
they have you know, these really cool things. Is that
something that we will see start making its way into
the American workplace?
Speaker 2 (11:41):
You think, I, Well, look, I I'll tell you from
personal experience. Here with NAOPS offices, we have a quiet space.
We came into this space and this is before the pandemic.
We built this room for that exact purpose. You know,
it's a space for people to get away. If they
need to take a very private phone call, they have
the opportunity to do so. They need to take a
power nap, they can do so. You know, there's a
(12:03):
nice bark lounger in there. You know, take a good
fifteen minute power nap, come back out and refresh. It's important.
And I think you know, again, when you're looking at
the amenities that buildings are putting in or even employers
are putting in within their own office suites. A lot
of that is in mind of both the employer and
(12:24):
the and the building owner to do just that. You know,
I've had a conversation with some folks about, you know,
go back twenty five years ago, and how weird we
all thought it was that a lot of these dot
com startups were having ping pong tables in their room,
you know, pool tables, video games. We're like, oh my god,
who are these crazy people? Yet now you're seeing that
(12:47):
in a lot more buildings with space dedicated to that,
because it's another way for people to decompress, to you know,
maybe not think about that spreadsheet that's in front of them,
and go down and play Miss pac Man for a
few minutes and say, Okay, good, I managed to fend
off the ghosts for a while. I'm ready to come
back and take a look at this spreadsheet again. But
(13:07):
I think that that's really the future of workspaces as
we look at it. And you know, I think the
pandemic just helped accelerate the repurposing of that space.
Speaker 1 (13:17):
Okay, so you have more experience seeing those type of
repurpose spaces obviously than I do. What is the most
unique or strangest thing that you've seen a company add
for their employees.
Speaker 2 (13:36):
I guess probably strange is in the eye of the beholder.
You know, there probably some people would look at our
quiet room and say that that is really strange. But
you know, one of the things that I've seen that
I still get mystified about, but I think it's a
pretty neat use of space is these phone booth like
structures that get put in where there are spaces that
(13:56):
are about the size of the old phone booths we
used to see on streets. People can go and take
private calls that you know, maybe you aren't work relating,
you know, maybe they have to talk to their attorney,
or they're talking to their daycare, but they don't feel
like blasting that out to public. But here's a very
quiet space that people could get it to. It doesn't
have to take up a whole lot of real estate
in the suite, but it kind of evokes, you know,
(14:19):
days gone by, so to speak, with having these uh
and they fold in just like the old phone booths
used to in terms of the doors. It blows my
mind when I see it. It really is kind of
a what's old is new again?
Speaker 1 (14:32):
Yeah, definitely, because you don't see those around anymore.
Speaker 2 (14:36):
No, you know, sometimes London still has them. They but
I don't think they're really phones anymore where they keep
them for people to for Wi Fi hotspots, and it
always blows my mind when I see them overseas.
Speaker 1 (14:48):
Right, So now I want to shift gears a little bit.
I know, I'm not sure how much you can answer this,
but I'm gonna ask anyway. We all know that AI is,
you know, really taking a grip on the workplace and
on jobs in general, and there is no way around
the fact that it is going to replace some jobs eventually.
(15:12):
How do you think AI will change the workplace as well?
Do we have any indications of that yet?
Speaker 2 (15:20):
I think it's a little early in the game right
now to know about that. You know, we're really just
starting to see that come to fruition, and in certain
professions I think, you know, looking at what a lot
of office occupiers do on a day to day basis.
You know, I'll use a law firm as a great example.
I don't think anyone's willing, certainly, I'm not to trust
(15:42):
AI to develop a good defense or a good prosecution
for a case. Yet, so I think we're still in
the real early days about that and how that's going
to potentially impact how workspaces are used.
Speaker 1 (16:00):
Okay, and then that leads me to my next question,
which is again technology. The whole idea and the reason
that people have gotten behind the idea of technology is
because it is supposed to allow us more for leisure times.
As you know, at the moment, I would say most
people spend majority of their life at work when you
(16:22):
count up the number of hours, second most would be sleeping,
and then you know after that is with your family
or whatever. I think there's ben I can see where
people would have a pushback as technology continues to advance, saying,
you know what, I don't need to work harder, I
need more leisure space. Do you think something like that
(16:43):
would happen, and if so, how do you think that
would turn out or end up looking.
Speaker 2 (16:48):
Leisure space in the office. Is that what you're specifically
asked on. Just want to make sure I'm clear.
Speaker 1 (16:52):
Oh No, I was thinking more along the lines of
maybe not even leisure space, but leisure time out of
the office, because we do spend so much time in
the office, and we want to spend more time with
the people we love.
Speaker 2 (17:05):
Sure, you know, I mean it's probably a better question
for business leaders like you know, like at IBM or
or you know, other large companies about how they want
to structure their work week. I mean, I know that
there have been tests in you know, some companies about
doing it to thirty two hours a week. There have
been some discussions about that politically, but I don't see
(17:29):
that changing here in America anytime soon. But you know,
maybe I'm just reading the political tea leaves wrong. I
don't think that there isn't a desire for you know,
I think individuals to say, well, yeah, I mean, who
doesn't want to spend less time at work? But you know,
we we have to get paid as well too, So
I'm not really sure that that's going to happen anytime soon.
Speaker 1 (17:54):
Yeah, I agree with you. I just wanted to see
what your thoughts are of you had had any experience
in that area. So have you seen where I know
you said you've seen some people downsize. Most people are
just repurposing. Have you seen anything on the opposite end
(18:14):
where people are expecting to grow so exponentially that they
need something just drastically larger.
Speaker 2 (18:23):
Yeah, you know. And one of the things that we've
seen Rebecca throughout this time, and this is important so,
is that there's what we call a flight to quality.
And by that I mean the newer office buildings are
the ones that are rich with amenities, you know, So
in essence to flight to qualities, I was talking about,
(18:44):
what I think you're gonna find is it employers, tenants
are still going to want that, and so there will
still be this need for space. So I do think
as we move forward, you know, you're going to continue
to find companies looking for that. It's just gonna be
how we use that space differently.
Speaker 1 (19:04):
Yeah, that makes sense. So what do you think that
means for like historic buildings. Let's say you have a
building in the twenties, and of course it used to
be all partial down into these little tiny rooms, but
there's a historical significance. Do you think that's gonna be
in jeopardy of going away and losing that architecture?
Speaker 2 (19:27):
I don't. There are already programs that are out there,
some by the government within the private sector about preserving
those buildings, and they've been sometimes they're still used as
these offices. May look at the Empire State Building. I mean,
it may be the one of the most famous office
buildings around and it's about one hundred years old, still
functioning his office space. You know, go do a riverboat
(19:50):
tour in Chicago, you see all this wonderful architecture of
some of these buildings. Some of them are still used
as office space, but some of them, and I think
that this might be what you're getting at, still run
into buildings just getting old. I mean, buildings aren't different,
you know, any different than people they age. But what
we are seeing is a way to repurpose those buildings
that I think also helps one of the biggest problems
(20:14):
we're seeing right now, which is, you know, the lack
of housing that's out there. And you know, the development
community is been working with governments, local government, state governments.
We're working with the federal government right now to develop
programs to help repurpose these older office buildings into residential space.
(20:35):
So it's still bringing people to the downtowns keeping a
real vibrant community, because that community isn't just office space,
it's apartments, it's shops. I mean, it's the old where
we live, workshop and play, but you know, we're the
development community has been working with government to be able
to do that, and part of it is, to your point, Rebecca,
(20:57):
keeping these older buildings, which have some of them do
at least really unique architecture. Yeah.
Speaker 1 (21:05):
I love old buildings. I'll admit it. I'm a sucker
for all the whole architecture. I just love it.
Speaker 2 (21:12):
There's some great architecture out there, and there are a
lot of places that do want to present I mean,
you know, they're the development community looks at those and says,
you know, there's you know, real opportunity there with some
of these buildings, because there are people like yourself, myself included,
who look at that and say that's just wonderful design
and it really defines a city.
Speaker 1 (21:33):
Right and and if you you know, do if you
know anything about it, you understand it would be so
difficult and expensive for us to recreate a lot of
what was done, which honestly kind of can blow your
mind when you think about, Yeah, we're advanced technology, but
it's almost like we've lost a lot of those skills
(21:54):
and how to make things pretty. We've we've taken minimalism
almost too far.
Speaker 2 (21:59):
Yeah, you know, I'm not an architect, so I certainly
can't probably be the best comment or on that. But
you know, I mean, look at it's always a matter
of taste. But I think when you look at what
we saw, you know, in some of the neo classical
buildings and the days gone by, you know, to maybe
what we saw, particularly in the seventies with's some real
brutalist architecture, to say that those are on opposite ends
(22:21):
of the spectrum would be an understatement. Right.
Speaker 1 (22:24):
So when it comes to adding amenities and things that
will entice you know, employees back into the building, how
do we or do we even need to incentivize not
only the employer to do such things, but the owner
of the buildings who are leasing them out. How do we,
(22:46):
you know, encourage them to offer those things as the
employees interested in those things.
Speaker 2 (22:53):
Sure, you know, Rebecca, I think the market's dictating that,
and I think that that's the real incentive there is.
You know, as I might earlier, we're seeing this flight
to quality by tenants. You know, they want the newer buildings,
they want the amenity rich buildings because that's what their
employees are saying. You know, I want the fitness center
I want the access to shops, I want the daycare,
(23:13):
I want the game rooms. So the market's really dictating that,
and that's where you know, tenants are moving too. And
if the building doesn't have it, in a lot of cases,
they're putting it in there because that's what their tenants want.
You know. That's why they're going to have to keep
the tenants. You know, they're not going to be able
to just keep it as is. You know, they're going
to need to make the change. But you know, I
(23:34):
think a lot of the folks in the development community,
you know, they see those changes and they're making those changes.
If they are, you know, don't already exist. So I
would probably say the biggest driver is is the good
old market.
Speaker 1 (23:48):
Okay, that was kind of my question is do you
think we would you know, need government assistance or incentives
that way, or do you think it's just truly a
supply and demand that will drive that.
Speaker 2 (24:00):
I think it's a supply and demand that's driving it.
I mean, it largely has. I mean real estate has
often been that, you know, you hear the old an acronym,
excuse me, the old saying of you know, location, location, location,
and that's true, but it's also you know, the amenity,
the amenity, the amenity, you know what what's available in
that building, and the market has in the past and
(24:21):
it will continue to drive where people go.
Speaker 1 (24:25):
Yeah, I agree. Are there any downsides to these changes?
Speaker 2 (24:32):
You know, I wouldn't necessarily say that they're downside because
change always brings a bit of uncertainty to it. But
if you look at the history of not just civilization,
but you know, looking at real estate, you know, humans
adapt and I think that's the wonderful thing about us
as we always find a way to adapt. We may
not like it at first, you know, nobody ever, well,
(24:53):
there are very few people that that sit there and
say I love change. But in the end, because change
can kind of be gradual, they don't realize it's happening.
And we saw a big harsh change in how we
work with the onset of the pandemic. But I think
what we found now is is that you know, it
kind of accelerated where people want to be and how
(25:16):
they want to work, and that is, you know, they
want to have some flexibility for that work life balance,
but they also want to have that opportunity to still
meet with their peers, and you know, I think that
that's where we're seeing the office space move to now,
which is a reflection of you know, where we're going,
and that is a lot more collaboration, you know, opportunity
(25:38):
to meet with my peers, but also an opportunity to
give me, you know, some flexibility. Perhaps you know, I'm
going to be visiting my parents, Well, you know, I
can still fire up the old laptop at their place
and I'll work remotely that day.
Speaker 1 (25:54):
Okay, I love that. And then obviously, as far as
the pandemic it goes, we saw a huge migration out
of big cities and into not suburban but actually more
rural areas. Have you seen in the commercial real estate
realm have you seen an increase in development for business
(26:17):
in rural areas.
Speaker 2 (26:20):
They were using the space that was that was there.
But I think that that migration was temporary, and we're
starting to see, not even starting, we are seeing, you know,
that migration come back towards the urban areas. And that's
partly because some you know, there are a number of
companies out there that are not permitting exclusive remote work
(26:41):
and if you need to be back in the office
on a hybrid it is not so easy to fly
in from a rural area to you know, more metropol
or even drive in. I mean, it takes time. So
we're you know, there may have been a little while,
but by and large it is still you know, in
terms of where offices located, it's still the urban core
(27:02):
and and of the suburbs. And you know, while we
did see that migration for a little bit, the fact
that most companies are having their employees in at least
part of the time. Now, uh, there's definitely you know,
I think we're seeing that migration back towards the city.
And when you look at numbers on multifamily and leasing
of apartments, you certainly see that, you know, there's definitely
(27:25):
an uptick in in in leases in in the urban areas.
Speaker 1 (27:30):
Okay, and then here's my final question for you, because
we're coming up to the end of our time. You're
the expert. I'm just a curious cat. Is there anything
the audience needs to know about the subject we're talking
about today that I just didn't know to ask you about.
Speaker 2 (27:48):
You know, I think it's a great question, and I
would probably say this, you know, there's this kind of
narrative that's been out there for a couple of years
now of you know, the office is is doomed, and
I don't think that's the case, not just because we
want to collaborate, but that's been the foundation of community
to a large degree. It's what's brought us into urban
(28:10):
centers and what's in the urban centers. That's where we shop,
that's where we play, and you know, there's still a
real need for us to get together. Part of it's
going to be in that play that we've talked about.
You know, we still want to go see a concert,
we want to go see an art exhibit, and we
still need to work. I mean as much as we
you know, nobody ever sits there and wakes up every
(28:31):
morning and says I can't wait to go to work
is what puts food on the table. But being in
that area where that's all around, you know, I think
we learned of the pandemic that we miss that it's
just you know, recognizing that it's not just the play side,
that it's the work side too, and we like having
that all in kind of one area.
Speaker 1 (28:52):
I love it. If you will, I'll give you a
chance to plug your organization. If people want to go
to your website and learn more.
Speaker 2 (29:01):
Yeah, if you'd like to learn more about it, including
you know, how we really do live, work, shop, and play,
but more importantly, what that future of workspace looks like.
I encourage you to visit our website an aiop dot org.
Speaker 1 (29:15):
Awesome. Thank you so much for your time today and
for sharing your expertise and wisdom with us. It's always
good to know what's possibly coming down the pike for us.
Speaker 2 (29:27):
Rebecca, thank you so much for having me. It's been delightful.
We'll talk about, you know, all this fundamental change that's
taking place and the exciting things that are coming out
of it.
Speaker 1 (29:35):
I hope you've enjoyed today's show. Thanks for tuning into
the show on your favorite local radio station. You can
now listen to this show or past shows through the
iheartapp or on iHeart dot com. Just search for Virginia
Focus under podcasts. I'm Rebecca Hughes with a Virginia news network,
and I'll be here next week on Virginia Focus
Welcome to Virginia Focus. I'm Rebecca Hughes of the Virginia
News Network. The COVID nineteen pandemic caused a massive shift
in the way companies and employees via the traditional office,
and America tripled the number of remote workers. According to
a report from the US Census Bureau, remote workers are
pushing back against returning to the office and as a result,
the office of today and tomorrow is one that will
(00:27):
need to be more suited to the worker than it
was in the past. We're talking to Mark Selvitlli, the
CEO of NAIOP, which is the Commercial Real Estate Development Association,
to learn how employers will need to put a greater
focus on wellness, amenities, and comfort while facilitating meetings with
workers who are off site to enable collaboration and networking.
(00:47):
Welcome to the show. I'm so glad we could talk
today about the redefinition of our workforce, as remote workers
are kind of rejecting the whole going back into the
office thing. Why don't you go ahead and start by
telling us what makes you qualified to talk about this?
Speaker 2 (01:08):
Sure? Well, thanks for having me, Rebecca. I work with
the Commercial Real Estate Development Association and we represent those individuals,
the owners, investors, operators of office buildings, among other commercial
real estate classes. So you know, obviously we have a
very deep vested interest in, you know, how the space
(01:30):
is utilized, who's utilizing it, when they're utilizing it. So
we look at it very carefully about, you know, how
the return to office is going since we've come out
of the pandemic a few years ago.
Speaker 1 (01:43):
So when't we start by talking about that, like what
have you seen as far as the changes pre pandemic
versus post pandemic?
Speaker 2 (01:53):
Yeah, and I'm glad you worded it that way, because
when we look at the pre pandemic, I think we
can all say that, you know, how the work was there.
We were already on the trend towards telework, if you know,
it wasn't already happening with at least a day a
week for most individuals. And we went from maybe doing
that one day a week to, of course, as we
all remember or maybe want to forget, doing it every
(02:16):
day of the week. But as we thankfully emerge from
the pandemic, you know, there was definitely still a reluctance
to go back. But that did change, and I think
Rebecca some of the reason we saw that wasn't just
that employers were saying, you have to come back in.
What we found through you know, studies that we've seen
(02:36):
in the industry from what we're hearing, you know, even
what I'm seeing with my own team, is that, you know,
humans are social creatures, and when we are in our
home office day in and day out, we don't get
that collaboration and interaction that we need. I mean, there
are some jobs where that's probably applicable, you know, they're
(02:58):
they're completely contensed in a screen, locked up in their
home office. But for the vast majority of jobs, people
need that interaction and that collaboration and the entrepreneurship that
comes out of that. And I think that that's brought
us to where we are today, which is most companies
are back about three days a week, and I think
(03:19):
that that's probably the model we're going to see moving forward.
Speaker 1 (03:23):
Okay, I can say that, you know, I'm I was
a remote worker. I actually was in office during a
large part of COVID as one of the few that
was in office to kind of monitor the servers in
case something went down. But I've been remote ever since.
And now there's that push back into office, which is fine,
(03:47):
But I feel like a lot of remote workers would
say what I'm about to say, which is, yes, there's
a part of me that missus seeing you know, my
co workers day in and day out. But we learned
during that process how to collaborate through things like teams
and zoom, and I don't I can only speak for
(04:09):
me at this point. I don't feel like I'm missing
any of that because I can do a quick call
through one of these mediums to a coworker and we
can chit chat or we can talk business, you know,
or both. Of course, my job is one that is
you know, I'm sure there are other jobs that require
(04:29):
that that collaboration more of a hands on kind of thing.
How much pushback has there really been? Is it a
vast amount?
Speaker 2 (04:39):
Yeah, you know, I mean it may depend on from
industry to industry. But again, what we've seen, you know,
really taking a look at this and taking a look
at industry studies, is that people generally speaking, you know,
the surveys have said they they don't want to be
working from home every day, that they do want to
be in and you know, e three day seems to
(05:00):
be that magic number on that. But to your other
point too, I think it's important to discuss about that
collaboration that comes from it, because certainly, you know, we
didn't all stop collaborating and creating when we worked from home.
But I think what we've found is that there's a
more organic collaboration that takes place when you're in person.
(05:24):
You know, I can push a button right now and
try to talk to one of my colleagues by teams,
but there's no guarantee that they're going to pick up
or I don't know that they're busy. But if I
have a sun an idea and we're both here in
an office space and I can walk down the hall
and they see that, I'm you know, kind of excited
and gleeful, like they need to talk. If they're busy,
(05:44):
maybe they're going to stop what they're doing. If they're there,
you know, we can we can have that conversation, let
that idea already begin to germinate, and you know, I
do think that there's a real positivity that that comes
out of that, and that moment isn't lost. And I
think what we also see too, and perhaps we can
talk more about this, but I sometimes think that this
(06:06):
gets overlooked, and that is the learning bios mosis. You know,
when you're in an office space, you hear things, whether
I'm directly engaged in that meeting or not, I can
hear my colleagues or my supervisors are talking about because
it's just kind of that background noise and you learn
that way. And you know, there's some real concern about
(06:31):
young professionals right now, and this is concerned that they've expressed,
you know, are they learning as much as they need
to by not necessarily being with their supervisors and or
peers on a regular basis.
Speaker 1 (06:46):
And I'm glad you brought up the younger group because
that was going to be one of my questions. You know,
we've seen recent studies talking about how some of the graduates,
I want to say, from you know, twenty twenty four,
the spring of twenty twenty four, they are having all
kinds of trouble keeping a job. They may have been
(07:08):
able to get a job, but they aren't able to
keep it. And a lot of the complaints are that
they don't understand, you know, the etiquette of being in
a workforce, you know, and these types of things. There's
also something to be said though for this younger generation,
they don't want to be saddled with an office. They
(07:29):
love the idea of remote work so they can travel
and they can enjoy life before having the responsibility of
kids in the house that kind of keep you in
a stagnant place. How do we balance those things?
Speaker 2 (07:43):
And I think you're seeing that equilibrium coming into play
right now between employers and employees. Most companies, you know,
have their teams back about three days a week, and
you know, it's it's recognizing that and it's not just
the younger employe, you know, it's really looking at all
of them. But you know, again, I don't think your
(08:03):
point's wrong. We're younger employees. That work life balance is
more important to this generation that's coming into the workforce
than it was for earlier generations. And you know, with
being in three days a week, I think that employers
and employees are finding that balance that that addresses giving
them the opportunity to you know, work remotely more than
(08:26):
certainly I did when I came into the workforce far
too long ago, but also still getting that desire from
the employer to have people there where they can. You know, again,
I think be a real contributor to the entire organization.
Speaker 1 (08:43):
I like that answer. So what does this mean in
regards to real estate, because I know in the height
of the pandemic, there was discussion that office space, we're
going to have more of it than we need. You know,
companies aren't using it. They're not going to continue to
pay rent or whatever on these spaces. Oh no, what
(09:07):
are we going to do now? Now we've got this
three day a week pushback into office, But a lot
of times, because it's only three days, that still means
you don't have a full staff in the office and
you don't need as much space. So what does that
look like.
Speaker 2 (09:22):
Well, it isn't necessarily they don't need as much space.
And we're starting to get data now because we're starting
to see more and more lease renewals take place. And
what a lot of companies are doing is they're repurposing
the space they have, so they're not necessarily downsizing. I mean,
we do see that. Don't get me wrong. There are
some that are downsizing, but you're also seeing others that
(09:43):
are taking more space. But what they're doing is utilizing
the space differently in that you know, this is you know,
we all I think most of us remember at some
point the late nineties movie office space, you know, just
one big cubicle farm, and you know it was rightfully
derided as kind of being this dreary place. But what
(10:05):
you're seeing now is a lot of spaces that are
being developed to foster that collaboration that I was speaking
about earlier. So a lot of huddle rooms, workspaces, workrooms,
and it's not just your traditional boardroom. It isn't you know,
this big, long, oaken table with chairs all around it.
Now you're talking about spaces with whiteboards and couches and
(10:26):
throw pillows where it kind of makes it feel a
little bit more like home. Are certainly you know, a
little bit more comfortable than a cubicle. And that's how
they're using these spaces. And it's also a difference what
you're seeing in the building as a whole, where you're
seeing a lot of landlords now take some of their
existing space and repurpose it, repurpose it into fitness centers,
(10:50):
game rooms, bringing in shops or cafes or daycare things
that are important to a lot of employees. And that
is what we've heard from, you know, people that are
going into offices you know, this is what I want
to see, and I think you're seeing the development community
respond to that.
Speaker 1 (11:10):
Okay, I like that answer too. I know one of
the other main concerns of people when they do have
to return to office is you know, they want a
wellness and a mental health support. You know, we go
online and we see these videos a little short clips
or whatever from Japan and they have nap pods and
(11:32):
they have you know, these really cool things. Is that
something that we will see start making its way into
the American workplace?
Speaker 2 (11:41):
You think, I, Well, look, I I'll tell you from
personal experience. Here with NAOPS offices, we have a quiet space.
We came into this space and this is before the pandemic.
We built this room for that exact purpose. You know,
it's a space for people to get away. If they
need to take a very private phone call, they have
the opportunity to do so. They need to take a
power nap, they can do so. You know, there's a
(12:03):
nice bark lounger in there. You know, take a good
fifteen minute power nap, come back out and refresh. It's important.
And I think you know, again, when you're looking at
the amenities that buildings are putting in or even employers
are putting in within their own office suites. A lot
of that is in mind of both the employer and
(12:24):
the and the building owner to do just that. You know,
I've had a conversation with some folks about, you know,
go back twenty five years ago, and how weird we
all thought it was that a lot of these dot
com startups were having ping pong tables in their room,
you know, pool tables, video games. We're like, oh my god,
who are these crazy people? Yet now you're seeing that
(12:47):
in a lot more buildings with space dedicated to that,
because it's another way for people to decompress, to you know,
maybe not think about that spreadsheet that's in front of them,
and go down and play Miss pac Man for a
few minutes and say, Okay, good, I managed to fend
off the ghosts for a while. I'm ready to come
back and take a look at this spreadsheet again. But
(13:07):
I think that that's really the future of workspaces as
we look at it. And you know, I think the
pandemic just helped accelerate the repurposing of that space.
Speaker 1 (13:17):
Okay, so you have more experience seeing those type of
repurpose spaces obviously than I do. What is the most
unique or strangest thing that you've seen a company add
for their employees.
Speaker 2 (13:36):
I guess probably strange is in the eye of the beholder.
You know, there probably some people would look at our
quiet room and say that that is really strange. But
you know, one of the things that I've seen that
I still get mystified about, but I think it's a
pretty neat use of space is these phone booth like
structures that get put in where there are spaces that
(13:56):
are about the size of the old phone booths we
used to see on streets. People can go and take
private calls that you know, maybe you aren't work relating,
you know, maybe they have to talk to their attorney,
or they're talking to their daycare, but they don't feel
like blasting that out to public. But here's a very
quiet space that people could get it to. It doesn't
have to take up a whole lot of real estate
in the suite, but it kind of evokes, you know,
(14:19):
days gone by, so to speak, with having these uh
and they fold in just like the old phone booths
used to in terms of the doors. It blows my
mind when I see it. It really is kind of
a what's old is new again?
Speaker 1 (14:32):
Yeah, definitely, because you don't see those around anymore.
Speaker 2 (14:36):
No, you know, sometimes London still has them. They but
I don't think they're really phones anymore where they keep
them for people to for Wi Fi hotspots, and it
always blows my mind when I see them overseas.
Speaker 1 (14:48):
Right, So now I want to shift gears a little bit.
I know, I'm not sure how much you can answer this,
but I'm gonna ask anyway. We all know that AI is,
you know, really taking a grip on the workplace and
on jobs in general, and there is no way around
the fact that it is going to replace some jobs eventually.
(15:12):
How do you think AI will change the workplace as well?
Do we have any indications of that yet?
Speaker 2 (15:20):
I think it's a little early in the game right
now to know about that. You know, we're really just
starting to see that come to fruition, and in certain
professions I think, you know, looking at what a lot
of office occupiers do on a day to day basis.
You know, I'll use a law firm as a great example.
I don't think anyone's willing, certainly, I'm not to trust
(15:42):
AI to develop a good defense or a good prosecution
for a case. Yet, so I think we're still in
the real early days about that and how that's going
to potentially impact how workspaces are used.
Speaker 1 (16:00):
Okay, and then that leads me to my next question,
which is again technology. The whole idea and the reason
that people have gotten behind the idea of technology is
because it is supposed to allow us more for leisure times.
As you know, at the moment, I would say most
people spend majority of their life at work when you
(16:22):
count up the number of hours, second most would be sleeping,
and then you know after that is with your family
or whatever. I think there's ben I can see where
people would have a pushback as technology continues to advance, saying,
you know what, I don't need to work harder, I
need more leisure space. Do you think something like that
(16:43):
would happen, and if so, how do you think that
would turn out or end up looking.
Speaker 2 (16:48):
Leisure space in the office. Is that what you're specifically
asked on. Just want to make sure I'm clear.
Speaker 1 (16:52):
Oh No, I was thinking more along the lines of
maybe not even leisure space, but leisure time out of
the office, because we do spend so much time in
the office, and we want to spend more time with
the people we love.
Speaker 2 (17:05):
Sure, you know, I mean it's probably a better question
for business leaders like you know, like at IBM or
or you know, other large companies about how they want
to structure their work week. I mean, I know that
there have been tests in you know, some companies about
doing it to thirty two hours a week. There have
been some discussions about that politically, but I don't see
(17:29):
that changing here in America anytime soon. But you know,
maybe I'm just reading the political tea leaves wrong. I
don't think that there isn't a desire for you know,
I think individuals to say, well, yeah, I mean, who
doesn't want to spend less time at work? But you know,
we we have to get paid as well too, So
I'm not really sure that that's going to happen anytime soon.
Speaker 1 (17:54):
Yeah, I agree with you. I just wanted to see
what your thoughts are of you had had any experience
in that area. So have you seen where I know
you said you've seen some people downsize. Most people are
just repurposing. Have you seen anything on the opposite end
(18:14):
where people are expecting to grow so exponentially that they
need something just drastically larger.
Speaker 2 (18:23):
Yeah, you know. And one of the things that we've
seen Rebecca throughout this time, and this is important so,
is that there's what we call a flight to quality.
And by that I mean the newer office buildings are
the ones that are rich with amenities, you know, So
in essence to flight to qualities, I was talking about,
(18:44):
what I think you're gonna find is it employers, tenants
are still going to want that, and so there will
still be this need for space. So I do think
as we move forward, you know, you're going to continue
to find companies looking for that. It's just gonna be
how we use that space differently.
Speaker 1 (19:04):
Yeah, that makes sense. So what do you think that
means for like historic buildings. Let's say you have a
building in the twenties, and of course it used to
be all partial down into these little tiny rooms, but
there's a historical significance. Do you think that's gonna be
in jeopardy of going away and losing that architecture?
Speaker 2 (19:27):
I don't. There are already programs that are out there,
some by the government within the private sector about preserving
those buildings, and they've been sometimes they're still used as
these offices. May look at the Empire State Building. I mean,
it may be the one of the most famous office
buildings around and it's about one hundred years old, still
functioning his office space. You know, go do a riverboat
(19:50):
tour in Chicago, you see all this wonderful architecture of
some of these buildings. Some of them are still used
as office space, but some of them, and I think
that this might be what you're getting at, still run
into buildings just getting old. I mean, buildings aren't different,
you know, any different than people they age. But what
we are seeing is a way to repurpose those buildings
that I think also helps one of the biggest problems
(20:14):
we're seeing right now, which is, you know, the lack
of housing that's out there. And you know, the development
community is been working with governments, local government, state governments.
We're working with the federal government right now to develop
programs to help repurpose these older office buildings into residential space.
(20:35):
So it's still bringing people to the downtowns keeping a
real vibrant community, because that community isn't just office space,
it's apartments, it's shops. I mean, it's the old where
we live, workshop and play, but you know, we're the
development community has been working with government to be able
to do that, and part of it is, to your point, Rebecca,
(20:57):
keeping these older buildings, which have some of them do
at least really unique architecture. Yeah.
Speaker 1 (21:05):
I love old buildings. I'll admit it. I'm a sucker
for all the whole architecture. I just love it.
Speaker 2 (21:12):
There's some great architecture out there, and there are a
lot of places that do want to present I mean,
you know, they're the development community looks at those and says,
you know, there's you know, real opportunity there with some
of these buildings, because there are people like yourself, myself included,
who look at that and say that's just wonderful design
and it really defines a city.
Speaker 1 (21:33):
Right and and if you you know, do if you
know anything about it, you understand it would be so
difficult and expensive for us to recreate a lot of
what was done, which honestly kind of can blow your
mind when you think about, Yeah, we're advanced technology, but
it's almost like we've lost a lot of those skills
(21:54):
and how to make things pretty. We've we've taken minimalism
almost too far.
Speaker 2 (21:59):
Yeah, you know, I'm not an architect, so I certainly
can't probably be the best comment or on that. But
you know, I mean, look at it's always a matter
of taste. But I think when you look at what
we saw, you know, in some of the neo classical
buildings and the days gone by, you know, to maybe
what we saw, particularly in the seventies with's some real
brutalist architecture, to say that those are on opposite ends
(22:21):
of the spectrum would be an understatement. Right.
Speaker 1 (22:24):
So when it comes to adding amenities and things that
will entice you know, employees back into the building, how
do we or do we even need to incentivize not
only the employer to do such things, but the owner
of the buildings who are leasing them out. How do we,
(22:46):
you know, encourage them to offer those things as the
employees interested in those things.
Speaker 2 (22:53):
Sure, you know, Rebecca, I think the market's dictating that,
and I think that that's the real incentive there is.
You know, as I might earlier, we're seeing this flight
to quality by tenants. You know, they want the newer buildings,
they want the amenity rich buildings because that's what their
employees are saying. You know, I want the fitness center
I want the access to shops, I want the daycare,
(23:13):
I want the game rooms. So the market's really dictating that,
and that's where you know, tenants are moving too. And
if the building doesn't have it, in a lot of cases,
they're putting it in there because that's what their tenants want.
You know. That's why they're going to have to keep
the tenants. You know, they're not going to be able
to just keep it as is. You know, they're going
to need to make the change. But you know, I
(23:34):
think a lot of the folks in the development community,
you know, they see those changes and they're making those changes.
If they are, you know, don't already exist. So I
would probably say the biggest driver is is the good
old market.
Speaker 1 (23:48):
Okay, that was kind of my question is do you
think we would you know, need government assistance or incentives
that way, or do you think it's just truly a
supply and demand that will drive that.
Speaker 2 (24:00):
I think it's a supply and demand that's driving it.
I mean, it largely has. I mean real estate has
often been that, you know, you hear the old an acronym,
excuse me, the old saying of you know, location, location, location,
and that's true, but it's also you know, the amenity,
the amenity, the amenity, you know what what's available in
that building, and the market has in the past and
(24:21):
it will continue to drive where people go.
Speaker 1 (24:25):
Yeah, I agree. Are there any downsides to these changes?
Speaker 2 (24:32):
You know, I wouldn't necessarily say that they're downside because
change always brings a bit of uncertainty to it. But
if you look at the history of not just civilization,
but you know, looking at real estate, you know, humans
adapt and I think that's the wonderful thing about us
as we always find a way to adapt. We may
not like it at first, you know, nobody ever, well,
(24:53):
there are very few people that that sit there and
say I love change. But in the end, because change
can kind of be gradual, they don't realize it's happening.
And we saw a big harsh change in how we
work with the onset of the pandemic. But I think
what we found now is is that you know, it
kind of accelerated where people want to be and how
(25:16):
they want to work, and that is, you know, they
want to have some flexibility for that work life balance,
but they also want to have that opportunity to still
meet with their peers, and you know, I think that
that's where we're seeing the office space move to now,
which is a reflection of you know, where we're going,
and that is a lot more collaboration, you know, opportunity
(25:38):
to meet with my peers, but also an opportunity to
give me, you know, some flexibility. Perhaps you know, I'm
going to be visiting my parents, Well, you know, I
can still fire up the old laptop at their place
and I'll work remotely that day.
Speaker 1 (25:54):
Okay, I love that. And then obviously, as far as
the pandemic it goes, we saw a huge migration out
of big cities and into not suburban but actually more
rural areas. Have you seen in the commercial real estate
realm have you seen an increase in development for business
(26:17):
in rural areas.
Speaker 2 (26:20):
They were using the space that was that was there.
But I think that that migration was temporary, and we're
starting to see, not even starting, we are seeing, you know,
that migration come back towards the urban areas. And that's
partly because some you know, there are a number of
companies out there that are not permitting exclusive remote work
(26:41):
and if you need to be back in the office
on a hybrid it is not so easy to fly
in from a rural area to you know, more metropol
or even drive in. I mean, it takes time. So
we're you know, there may have been a little while,
but by and large it is still you know, in
terms of where offices located, it's still the urban core
(27:02):
and and of the suburbs. And you know, while we
did see that migration for a little bit, the fact
that most companies are having their employees in at least
part of the time. Now, uh, there's definitely you know,
I think we're seeing that migration back towards the city.
And when you look at numbers on multifamily and leasing
of apartments, you certainly see that, you know, there's definitely
(27:25):
an uptick in in in leases in in the urban areas.
Speaker 1 (27:30):
Okay, and then here's my final question for you, because
we're coming up to the end of our time. You're
the expert. I'm just a curious cat. Is there anything
the audience needs to know about the subject we're talking
about today that I just didn't know to ask you about.
Speaker 2 (27:48):
You know, I think it's a great question, and I
would probably say this, you know, there's this kind of
narrative that's been out there for a couple of years
now of you know, the office is is doomed, and
I don't think that's the case, not just because we
want to collaborate, but that's been the foundation of community
to a large degree. It's what's brought us into urban
(28:10):
centers and what's in the urban centers. That's where we shop,
that's where we play, and you know, there's still a
real need for us to get together. Part of it's
going to be in that play that we've talked about.
You know, we still want to go see a concert,
we want to go see an art exhibit, and we
still need to work. I mean as much as we
you know, nobody ever sits there and wakes up every
(28:31):
morning and says I can't wait to go to work
is what puts food on the table. But being in
that area where that's all around, you know, I think
we learned of the pandemic that we miss that it's
just you know, recognizing that it's not just the play side,
that it's the work side too, and we like having
that all in kind of one area.
Speaker 1 (28:52):
I love it. If you will, I'll give you a
chance to plug your organization. If people want to go
to your website and learn more.
Speaker 2 (29:01):
Yeah, if you'd like to learn more about it, including
you know, how we really do live, work, shop, and play,
but more importantly, what that future of workspace looks like.
I encourage you to visit our website an aiop dot org.
Speaker 1 (29:15):
Awesome. Thank you so much for your time today and
for sharing your expertise and wisdom with us. It's always
good to know what's possibly coming down the pike for us.
Speaker 2 (29:27):
Rebecca, thank you so much for having me. It's been delightful.
We'll talk about, you know, all this fundamental change that's
taking place and the exciting things that are coming out
of it.
Speaker 1 (29:35):
I hope you've enjoyed today's show. Thanks for tuning into
the show on your favorite local radio station. You can
now listen to this show or past shows through the
iheartapp or on iHeart dot com. Just search for Virginia
Focus under podcasts. I'm Rebecca Hughes with a Virginia news network,
and I'll be here next week on Virginia Focus
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