Landlords are Zucked

Landlords are Zucked

Facebook is one of the largest companies in the world. It employs 45,000 people. Yesterday, CEO Mark Zuckerberg shared his views on the company's future:

Over the next 5-10 years, I think we could have 50% of our people working remotely...

We asked our employees about their experiences working from home. More than half say they're at least as productive as they are in the office. About 40% are interested in full-time remote work... [of these] around 75% said they might move to another place...

Figuring all this out will take time, so we're going to start by focusing on remote hiring.

Meanwhile, landlords are still telling me that "people cannot be productive without an office". They're actually right. But that's not going to save them. There are two main reasons for this:

The first reason is going to sound silly: People who work in an office are more productive doing "office work" in an office.

It sounds silly because it is silly. If you define productivity as "doing what you did in the office", then yes: the office is the most productive place on earth.

But if you define productivity differently, you might find that a variety people actually create more value while working in a variety of settings.

This is the biggest misconception among (most) landlords and (some) employers: Imposing old processes on a new paradigm.

There's a word for that. Skeuomorphism describes a digital object that tries to mimic the appearance and behavior of its physical counterpart. Skeuomorphism makes it easier for humans to adopt new tools. For example, using the name "Trash Can" for a folder on your computer makes it easier for users to understand that it's a place for deleted files. Calling it a "folder" makes it easy for people who grew up using paper to understand that it's a place where you can store multiple documents. Adding a "drop shadow" to images in a power point presentation makes the images look more natural and appealing — even though the shadow is not real. You get the idea.

Skeuomorphism is one of the reason the iPhone was so intuitive compared to other smartphones. Using visual cues and gestures from the physical world made the first iPhone super easy to use, even for a baby.

But at some point, babies need to grow up. When they do, they learn to use more complex tools and gestures. Most office employees are still babies when it comes to remote work.

The grown ups are here to help. GitLab is the world's largest all-remote company, with more than 1,200 team members spread across 65 countries. The company's playbook  describes the four phases of adapting to remote work. The first phase is called "the skeuomorph":

In Phase 1, a remote organization will look to imitate the design, structure, norms, ebbs and flows of an office environment. The primary goal is to merely continue to operate the business, but remotely.

Phase 1 is, indeed, not very productive for many companies. But it gets better. In phase 2, a company can start to adopt new processes and tools to increase efficiency and give employees more leeway in how they complete their tasks. In other words, it can stop trying to mimic the supervision (interface) and meetings (processes) of a physical office.

You can read about phase 3 and 4 on GitLab's web site. The point is that companies gradually adopt new tools and processes until remote work becomes more productive and more enjoyable.

Of course, remote work is not for everyone. More importantly, even employees that don't have a central office still need a place to work — whether they are on their own or with colleagues.

Which brings us to the second reason why  future demand for "office space" is not going to save landlords.

The future of work will require space. But a lot of that space will be located, designed, and accessed differently from what we currently call "office space".

A lot of it will have to be within walking distance to where people live — not because of Covid-19 or Covid-22, but because people like to walk and cycle. Especially people who are really good at their job and can live anywhere they like.

A lot of space will have to be in cities that remote employees will move to.  

And a lot of it will have to be available on-demand, bookable through an app, and designed to facilitate the productive completion of a specific task. Specific tasks may entail focused work, brainstorming with colleagues, presenting to a client, learning in a large group, recording a podcast, prototyping a new hardware device, and more.

I could go on but you get the idea: the best companies will need less of the kind of office space that's currently on offer. And they will need it to be packaged and delivered in a way that fits the way their team members work.

And to be clear: Many companies will continue to rely on "office work" in "office spaces" for many more years. But that's not going to be enough to prevent a total revolution in the office market. Earlier today, an analyst shared a report that many landlords thought was optimistic. The report found that 49% of the people currently working from home want to work at the office "as much as they did pre Covid".

Forty-nine percent.

A glass can be half full and remain valuable. An office building can't.


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P.S. / Bonus Content

  • I spoke to Bloomberg Businessweek about the why landlords are becoming more open minded about flexible terms (they have no choice)
  • NBC ran a segment about the future of offices, highlighting “Rethinking Real Estate, a book that even before the pandemic was projecting big changes in how offices will be used in the future." The book is available here.