JLL Boston relocated within 1 Post Office Square in January to a newly designed, 43,000-square-foot space that includes fewer private offices and more conference and meeting areas. Image courtesy of JLL
As the pandemic appears to recede, companies puzzling over how to revive dormant offices don’t have a proven roadmap to guide their real estate decisions.
But several common threads are emerging among Boston-area businesses that have recently relocated or signed leases: a further reduction in individual or assigned workspaces, an increase in casual collaboration zones and meeting areas and a preference for moderately smaller footprints driven by a pending lease expiration.
“The workplace is no longer a mandate. Therefore, it must be a magnet,” said Elizabeth Lowrey, a principal and director of interior architecture at Elkus Manfredi Architects in Boston. “If you want people to come to work, it’s got to be better than home.”
Elkus Manfredi’s solution for its own headquarters in the Innovation and Design Building in the Seaport District included a redesign that ousted private desks along the window lines, with their coveted Boston Harbor views. Taking their place are new “Ideation Desks” that serve as group collaboration areas, including whiteboards and a range of seating and workstations.
Jump in Short-Term Leasing
How companies translate new office designs into space requirements and lease terms has long-term implications for commercial real estate. According to Moody’s Analytics, short-term office leases registered a sharp spike in 2021. Companies signing leases for one year or less accounted for 32 percent of transactions nationwide, up from 15 percent in 2019, indicating lingering uncertainty about companies’ perception of their future real estate needs.
“The next few months will be telling, because we are hearing a lot of back-to-office plans being implemented,” said Victor Calanog, head of commercial real estate economics for Moody’s Analytics. “The ongoing uncertainties of whether your workforce will really return to the office will be the nexus point of decisions for the next six to 18 months.”
Downtown Boston’s office market has been resilient despite a surge in sublease offerings in 2020 and lingering low physical occupancy. Four leases topping 50,000 square feet were completed in the fourth quarter of 2021, as the vacancy rate dropped to under 11 percent, according to CBRE research. And asking rents rose for three consecutive quarters to nearly $70 per square foot at year’s end.
Security firm SimpliSafe is nearly doubling its occupancy to 150,000 square feet at 100 Summer St. in a relocation from 294 Washington St. But more common are deals driven by pending lease expirations and include moderate downsizing, such as Eaton Vance’s move from 325,000 square feet at International Place to a maximum 275,000 square feet at 1 Post Office Square.
Quickbase reduced the number of individual workstations in its office by over 40 percent as it relocated from Cambridge to downtown Boston and Waltham. Image courtesy of Dyer Brown
Consolidation Widely Discussed
Such deals helped the downtown office market record 426,000 square feet of positive absorption during the fourth quarter. But nearly 2.5 million square feet of office space is still available for sublease, according to CBRE research, and another 5.6 million square feet is under construction.
“Every company we talk to has a different plan [for office or hybrid work requirements],” said Ben Heller, managing director of brokerage for JLL Boston. “There’s no question some people are mandating that you’re in the office X or Y days, and at the other end you’re completely flexible and can be in when one wants to be in.”
Consolidation of office space is a frequently-mentioned goal among clients of Boston architects DREAM Collaborative, said Gregory Minott, the firm’s managing principal.
“As lease terms are coming up, they know they don’t have everyone coming in every day, so they’re looking at repurposing their space and in a lot of cases asking for a smaller footprint,” Minott said. “The incentives why you come to the office have changed. It’s not to get to your desk by 8 or 9 a.m., it’s really for a stated purpose.”
Traditional Rules No Longer Apply
Even accounting for the decade-old trend toward more flexible and collaborative workspaces, the pandemic has pushed companies to jettison traditional metrics for calculating their space needs and layout.
“We’ve had some clients taking this to the extreme with no individual space,” said Ashley Dunn, director of workplace at architects Dyer Brown in Boston. “We also see people who are doing the older model and adding amenities.”
Project management platform Quickbase was preparing to move its local offices from Cambridge to Boston just before COVID, but switched to a distributed workspace model after hearing from employees about demand for a suburban outpost. The company ended up leasing 42,000 square feet at Atlantic Wharf and approximately 20,000 square feet at CityPoint in Waltham. It previously occupied approximately 100,000 square feet on Cambrigepark Drive.
The biggest change at the new locations, both of which opened in the second half of 2021: a decrease from 80 to 45 percent in space occupied by assigned desks and offices, with the rest reserved for meetings and casual collaboration. Private offices now double as conference rooms that can be reserved for meetings.
“The executives said they were not going to be in every day either, so that added 14 meeting rooms,” Dunn said.
Even commercial brokerages whose business relies heavily upon demand for office space are acknowledging the shift away from dedicated square-footage for each employee.
Steve Adams
JLL Boston swapped out three floors for two at 1 Post Office Square in a relocation that had been planned before COVID. Private offices along the window lines were replaced by conference rooms as part of the move, which was completed in January.
“We were looking to have a very progressive workspace to begin with,” Heller said. “The impact of COVID is a near-term thing that’s going to have a very long-term effect. There are so many unassigned seats for visitors or people who aren’t in the office every day.”
Editor’s note: This report has been updated to correct the attribution of comments from JLL were from Managing Director Ben Heller.
Email: sadams@thewarrengroup.com
