From: Scot Ginsburg <scot.ginsburg@hughesmarino.com>
Date: Wed, Dec 9, 2020 at 1:19 PM
Subject: What do the five tech giants know that most don't?
To: Steve Scott <stevescott@techacq.com>
Hi Steve,
I hope you had a wonderful Thanksgiving and that the upcoming holiday season finds you healthy, happy and optimistic heading into 2021!
Throughout this year and across all of our offices, we've been asked by thousands of clients different versions of: "What is the future of office space?"
Many business leaders look to the large tech companies for clues about the future. Interestingly, this year alone, the five tech giants (Amazon, Google, Microsoft, Apple and Facebook) have expanded their real-estate footprint by more than 25%, their fastest rate over the past decade.
Earlier this summer our company's CEO, Jason Hughes, wrote an article about his vision for the future of office space that provided empirical examples from leaders of Microsoft, IBM, Yahoo – and even the U.S. Patent Office – that working from home (WFH) isn't universally effective for companies long-term. It's one thing to WFH to survive a global pandemic; it's another for a company to thrive in a competitive environment once team collaboration and accountability are table stakes again.
CNBC just ran a story stating that 3 out of 4 workers look forward to getting back to the office. A few months ago PwC did a large survey of business leaders where, surprisingly, 51% of the respondents are anticipating an increase in office space, 19% anticipate staying the same size, and only 30% plan a decrease in size. Those wanting to grow cited the need for more collaboration areas; those wanting to shrink cited the desire to reduce operating costs and anticipated transformation to more remote working.
Recently the Wall Street Journal ran a story on what some of the leading CEO's thought about WFH sustainability:
- Reed Hastings, CEO of Netflix, "I don't see any positives. Not being able to get together in person, particularly internationally, is a pure negative." WSJ asked Hastings: Do you have a date in mind for when your workforce returns to the office? Mr. Hastings: "Twelve hours after a vaccine is approved….. It's probably six months after a vaccine. Once we can get a majority of people vaccinated, then it's probably back in the office."
- Jamie Dimon, CEO of JPMorgan Chase & Co., "I don't know the future better than anyone else. I think going back to work is a good thing. I think there are negatives to working from home…We've seen productivity drop in certain jobs and alienation go up in certain things. So we want to get back to work in a safe way."
- Tim Cook, CEO of Apple Inc., "In all candor, it's not like being together physically. And so I can't wait for everybody to be able to come back into the office. I don't believe that we'll return to the way we were because we've found that there are some things that actually work really well virtually."
- Jim Fish, CEO of Waste Management Inc., "Most of us are not hermits…We need that social interaction, not only from a business standpoint but truly from a kind of personal-development standpoint."
- Arne Sorenson, CEO of Marriott International Inc., "It's a much harder way to work for anything that requires a personal relationship. And as a consequence, I think we're going to find that we maybe not go back to 100% in the office all the time. Because remote work clearly works for many things, but I think we're going to find that being together delivers value in productivity and creativity and relationships that is irreplaceable."
- John Schoettler, Vice President of Global Real Estate and Facilities at Amazon, "We believe that post-pandemic we will ultimately return to doing a majority of our work in the office. We believe that much of the best work that we do is done in the office where employees can come together, work together to solve problems and be collaborative."
One silver lining to this pandemic/recession is that office rents are dropping – in some cases as much as 50%. This will help to re-balance the landlord/tenant economic relationship, and ultimately deliver lower real estate costs for your organization that you can redeploy into other areas of your company's growth.
As always, our team at Hughes Marino remains committed to helping business leaders like yourself with your corporate real estate planning and execution. If there is anything we can do to help you, it would be our honor.
Happy holidays, and I look forward to staying in touch throughout the new year.
-Scot
Scot Ginsburg
Senior Vice President
Broker License #01300321
+1 858.344.5000 Mobile
+1 619.238.2111 Main
HUGHESMARINO
1450 Front Street, San Diego, CA 92101
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