Working from home is, in reality, a messy experience for many, especially parents, likely leading many firms to want to return to their offices post-pandemic.

What will be the long-term impacts of the pandemic on commercial real estate? It’s too early to tell.  

Some of the impacts are temporary. The hospitality sector was generally doing well before the pandemic. Now hotels are getting killed. But once the pandemic is “over” and consumers and business travelers feel comfortable using hotels, the hotel industry will bounce back.  

Brick–and–mortar retail is also in deep trouble. Store closures and tenant bankruptcies are common occurrences these days. But physical retail will recover just like hotels; it is just a question of who will survive. Still, the pandemic to a certain extent only accelerated a pre-pandemic trend – the demise of weak brick and mortar retailers. The likes of Amazon and big–box retailers were already redefining the landscape.    

The work–from–home, or WFH, phenomenon is a different story. Remote work, of course, existed before the pandemic. Office workers used to log in from home when needed and some were remote full-time, though on a much smaller scale. The pandemic changed that forever. 

WFH has been wildly successful. We have learned that most employees do not need to be in the office to perform their jobs. Improvements in information technology and video teleconference capabilities have been game changers. There was a WFH ramp-up period, but now we are in a groove.  

Tasks may take longer and the line between work and home can be blurry, but employees have proven they can be productive and have come to appreciate the time saved by not commuting and the flexibility of WFH. Employers see the benefits of WFH one way to save costs and recruit and retain employees.   

Long-Term, It Doesn’t Work 

A glut of available sublease space is on the market right now, leading some to wonder if the smaller office footprints for tenants are the future. The most recent quarter ended with almost 2.7 million square feet of available sublease space in Boston, a significant increase since the end of 2019.  

The day-to-day occupancy level of downtown office towers has been reported in the 8 percent to 12 percent range. If you have been downtown recently, you can vouch for this because it seems like a ghost town. Will this low level of occupancy continue after all of the pandemic uncertainty has been resolved? Will WFH bring about the end of the office sector? The answer is no. 

Despite the benefits of WFH, there still remains great value in coming to the office. When employees are physically together, there is greater opportunity for impromptu meetings, chance interactions, serendipitous conversations and quick exchanges of information. You can’t swing by someone’s office on Zoom.   

The conventional wisdom is that being physically together is better for solving difficult problems, brainstorming, collaborating, fostering innovation and maintaining a company’s culture and values. On a more basic level, human beings need personal interaction and crave personal connection.  

Some companies tried large-scale WFH programs well before the pandemic, then changed course when they realized it was not a panacea. WFH for the past eight months is one thing, but WFH forever is another. 

Time Will Tell 

Companies are still evaluating how WFH will fit into their post-pandemic plans, but many have already adopted it as a long-term strategy. Twitter and Zillow, among others, will allow employees to WFH permanently. Locally, LogMeIn recently announced it will only need half of its space at its corporate headquarters in Boston. Most of their employees will be permanently remote or remote hybrid – going into the office only occasionally or one to two days a week.  

The effect of WFH on commercial real estate won’t be decided by the end of 2021 because many companies do not plan to reopen their offices in a meaningful way until at least early or mid-2021 or, considering the recent spike in infections, even later. Some employees will be hesitant to come to the office if they or their family members have underlying health issues, or if a large contingent of the population refuses to take the vaccine. Any large-scale return to office will be gradual. The reentry will be a lot slower than the shutdown.  

Some companies will adopt significant permanent WFH measures, thereby reducing demand for office space. In simple terms, companies will not want to pay rent for offices that collect dust while their employees WFH.  

Other companies will return to the office on a full-time basis with vigor and may require more square footage to meet social distancing guidelines and satisfy employee safety concerns.  

However you look at it, we are not going back to the way things were. Office space will remain an important element of how we work, and more employers will permit employees to WFH at least some of the time.  

Francesco A. De Vito is the Managing Director of the Boston law firm Rackemann, Sawyer & Brewster, P.C.