Shortly after the coronavirus pandemic hit nearly eight months ago, businesses started questioning whether they would need as much office space going forward. But now, some are going further. They’re wondering if they need a headquarters office at all.In the Wall Street Journal last week, the chief executive of Freeport-McMoRan Inc. said the company is reviewing whether it should abandon its main office in downtown Phoenix. “We are showing we can get the work done remotely…We are questioning ourselves – do we really need the headquarters?” asked Richard Adkerson. The article cited other companies that may lop off their headquarters.The pandemic has demonstrated that today’s technology allows workers to get by without being in the office, the article said. While no decision has been made at Freeport, the mining company has conducted several surveys in which a majority of employees view remote work positively. Not only do they save commuting time, they save money and some couples may find they could even shed an automobile.Here’s an intriguing twist: If Freeport shuts down its headquarters, it may set up small satellite offices along the city’s perimeter. That way, employees can go to an office presumably closer to their homes when they need to collaborate or have an occasional face-to-face meeting.
Indeed, an article titled “Reimagining the Urban Office” in Harvard Business Review in August argued for that very setup – companies should consider giving up the big headquarters downtown while creating small offices near where most of the employees live.
“We envision that the neighborhood-oriented workplace would function as a cultural hybrid of the traditional office and working from home,” it said. The article ticked off several advantages, including the usual ones about less commuting time and cleaner air but also this one: “Teams located close to their areas of residence inherit the benefit of creating mini cross-functional clusters that might not otherwise coalesce if people worked in a centralized office with single-function work areas.”In other words, smaller offices may create, not deter, workplace collaboration. In a smaller office, it’s more likely that people from the finance department will mix with folks from sales and tech support. No telling what ideas might spring from such atypical mashups.
This is interesting because many had assumed that after the pandemic, office tenants large and small would simply scale back their real estate needs as companies adopt a hybrid system in which employees would work from home for some or most of their workweek. Instead, the result could be more complicated and nuanced. Oh sure, many offices may scale back and stop there, but some may take the drastic step of eliminating their big downtown headquarters in favor of developing a string of smaller suburban offices, as Freeport is considering.I’m wondering: If this became common, do you suppose this could work to the Valley area’s benefit? If big companies in Downtown Los Angeles, Century City and elsewhere shrunk or eliminated their headquarters but created a short chain of small, distributed workspaces, wouldn’t many of those new offices be in places such as Woodland Hills, Burbank, Santa Clarita and Westlake Village? If that happened, the new smaller offices from broken-up headquarters would help offset the loss of space from smaller tenants that downsize. Probably wouldn’t make up for all the loss, but it would help offset it.Big changes are coming to the commercial real estate market. We don’t know now how it will all play out, of course. But we do know that America’s workplaces will probably be forever altered – with numerous implications for the communities that house them, for the restaurants and other businesses that serve them and for the people who work there. If only occasionally.