What is the Future of Offices When Workers Have a Choice?

At the end of the 19th century, most American urbanites walked to work; as late as 1930, Manhattan’s residential population was larger than it is today, meaning the city was more mixed in terms of land use, not dominated by office towers. It’s not hard to imagine that many will once again prefer to work within walking or biking distance of home.

As a result, buildings in many traditional employment districts will have to compete more fiercely, and a small but significant percentage of office space will most likely have to be repurposed into housing, e-commerce fulfillment centers, delivery-only kitchens, health care centers, meeting spaces, event spaces and other uses.

Residential areas, street retail shops and hotels may have to accommodate more daytime workers. Signs of this shift are already visible. The nation’s largest multifamily operators, Avalon Bay Communities and Equity Residential, have been adding work and meeting spaces to their buildings for a few years now.

Common, the largest co-living operator, is partnering with local governments to develop new types of live/work communities. Hospitality brands like Starbucks, CitizenM and Mandarin Oriental have been experimenting with converting local coffee shops and hotel floors into work spaces that can be booked by the hour or day. And city governments are working to redistribute jobs and services across residential neighborhoods.

Post-Covid for example, a Brooklyn or Queens resident who previously commuted to Manhattan may opt to work several days a week in a shared space within a 10-minute walk from home. Some large employers are already experimenting with satellite offices in the suburbs of cities in which they already have a downtown headquarters. The main office will remain important for most companies, but fewer employees will be expected to be there all day, every day.

The office will become more of a consumer product. And just like every consumer product, the office will have to continually fight for its customers and meet their needs — not only when it’s time to renew the lease. Offices will need spaces for specific tasks like focused work, team brainstorming, client presentations and employee training. And they will need to be more focused on individuals, even if these people work for a large company.

These changes will be gradual, but they will have a significant impact on urban office buildings, which used to be perceived as almost as safe as government bonds. Consider, in comparison, that the “retail apocalypse” that led to multiple bankruptcies and the closing of tens of thousands of stores was a result of less than 12 percent of all activity moving online, over a period of two decades, while total sales were still growing.