The Office Is Dead
Get ready for the commercial real estate apocalypse
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In early March, Jeff Haynie, the CEO of Austin-based software company Pinpoint, was gearing up to find new office space. Pinpoint’s $25,000-per-month lease with WeWork for 1,800 square feet would be up in August, and it was time to move on. He was thinking he’d need maybe 10,000 square feet for his growing company, which makes software for programmers.
Then the pandemic hit, and along with it, the enforced work-from-home orders, and Haynie began questioning his figures. A survey he conducted a month in revealed that roughly half of the company’s 27 Austin employees would be perfectly happy to continue working from home. Maybe Pinpoint could get by with 3,000 or 5,000 square feet — less than half the amount of space he’d thought he needed — foregoing desks for basically a conference room and a little collaborative working space. And maybe, given that fewer employees might need to commute regularly or during rush hour, it could be in a neighborhood far cheaper than the Domain, the hot tech cluster where Facebook and Amazon also have offices. “It’s not something I was even thinking about six weeks ago, but it’s definitely something I’ve been talking about now with my investors,” Haynie says. “Overall it’s a win-win.”
This is just the tip of the iceberg. From startups and tech giants to more old-school Wall Street firms, businesses are rethinking the role of office space and whether they even need it. If, in the old world, an office was a form of corporate peacocking — a flashy location in some iconic building with a boutique-hotel level of design for clients, employees, customers, and investors— in the new world, it is becoming a very costly line item that could be reduced to the equivalent of a single flagship store. Instead of a sprawling, capital-intensive, real-world footprint, all the work can be done virtually, with one scaled-down symbolic home base left for critical face-to-face conversations, like meeting with clients or wooing talent. Perhaps in a space not much bigger than your average Le Pain Quotidien.
It’s something no one could have foreseen three months ago. After a decade of economic expansion, commercial rents had risen to an average of nearly $30 per square foot, or 3.4% over last year, according to an April report…
