Working post-COVID… for the times, they are a-changin’
You may have seen the headline “OpenText won’t reopen half of its physical offices post COVID-19 pandemic”. In the article, the writer says Opentext’s CEO Mark Barrenechea “is saying out loud what a lot of C-level executives are thinking. The new normal will require less commercial real estate as the capital expenses required can be deployed elsewhere.”
So, staring into my crystal ball, I think there are a bunch of post-COVID realities that will force more companies to make similar moves beyond the economic savings:
- Our public transit systems do not have the capacity to transport people safely in a post COVID world. It will be a long time before people get on the bus, subway or commuter train at rush hour and be shoulder-to-shoulder with everyone else. To have physical distancing, transit would require many orders of magnitude increase in capacity. At the same time, our roads do not have the capacity to allow people to get back into their cars instead of taking transit so it will be physically impossible for many employees to commute to work.
- Employees are looking at their Visa statements and now understanding how much they used to spend each week on gasoline, auto expenses, public transit costs, coffees, lunches, etc. This can be thousands of dollars per year per person. They are not going to want to go back to those expenses or the 1 to 2 hours a day of commute time. If minimal commuting becomes the new normal, how many families now only need one car and what will be the resultant impact on auto industry, car dealers, insurance companies, car repair shops, automotive collision centres, tow truck industry and the list goes on.
- As employees continue to work from home, employers will gather evidence that productivity doesn’t drop when people are at home or if it does, they will have to factor that into their economic model. Many managers who cannot manage other than “line of sight” will have to be re-trained or replaced. Many corporate cultures that “don’t trust their employees” will have to change. Many companies will have to re-define what is a workday beyond their current show up at 9, leave at 5. If you haven’t read “Work Sucks and How To Fix It”, you may want to.
I suspect the implications of COVID will be immense impact on real estate, and not only the commercial sector. If a person does not need to live close to work to avoid the commute, what will be the impact on the condo market? Will this be the death of the 550 square foot one-bedroom condo because people will now need a one-bedroom condo with two offices for the couple who lives there. What will happen to Toronto red-hot and expensive house prices when a person doesn’t need to live on the subway line to be close to work.
Also think about the impact on retail, small business food court franchisees, restaurants and others that depend on “going to work” related foot traffic for customers.
Think about how companies in our products and services supply chain will need to respond to the changes of stay at-home employees. As a colleague pointed out, we won’t use less toilet paper but more will need to be packaged for the consumer market and less for the commerical market. Same likely goes for food packaging. We will likely need less commerical janitorial services and more aimed at our new home office market. And again, the list goes on…
Yup, Opentext’s announcement is just the thin edge of the wedge.