The Future of the Office - Is It the Tale of Two Cities in Providence?
Monday, September 28, 2020
Is Providence the "right size" for the future of work? Eight months into the coronavirus pandemic, many offices remain shuttered, or are working with restrictions.
The future of work is in question. Companies like Facebook, Google, and Twitter are allowing their staffers to work from home deep into 2021 or beyond.
In Providence, a city dominated by small and mid-size businesses the future of work is more complex.
Matt Fair, Senior Vice President at Hayes and Sherry, says that Providence’s workspace is “The Tale of Two Cities.”
He says the buildings that are suffering from lower prices and an uncertain future are the “Old Providence” buildings — “largely owned by smaller/local owners and suffering from a combination of miss-management, structural vacancy and inflated pricing," said Fair.
"So when we see some of the prices drop it’s actually not a result of COVID uncertainty. These buildings had the same issues before COVID as they do now and I would expect many of them will continue to reduce pricing until they reach their true ‘market values," he added.
Some of those buildings have seen price deflation.
“On the other side of the market, you have the ‘New Providence’ buildings. These are the larger buildings in the market that have either been built or substantially renovated in the past 20 years,” says Fair.
Fair says these “New Providence” buildings are largely institutionally owned and offer a much higher level of service and quality to their tenants. Many features indicative of the “New Providence” assets include ground-level retail amenities, professional on-site property management, professional on-site security, fitness centers, efficient HVAC systems, large windows, taller ceilings, and in-building parking.
"This sector of the market has performed extremely well during COVID and continues to maintain healthy occupancy and stable valuations from both a rental rate and building valuation perspective. In some cases we’ve seen new leases get signed during COVID at rents that have set a new high watermark for the city," said Fair.
He cites that buildings like the IGT Center and others are generating top-tiered pricing envy since the pandemic began.
"The IGT Center has inked more than 10,000 SF of new leases for in the past few months in the mid $40 per square foot which are the top rents in the city. This building has about 230,000 SF of space and is 98.4% leased with only one (1) space available on the 9th floor that is about 3,700 SF. 10 Memorial Blvd exemplifies what it means to be a Class A property and we’re seeing evidence that Tenants are willing to pay for quality even amidst the uncertain backdrop of COVID," added Fair.
The future of in-office working is unknown. Many companies have been able to successfully pivot with work taking places at dining room tables and home offices.
But not all the outcome of working from home is positive.
Some employers are worried about the long-term impact of working from home. “Homeworking can also cause mental stress, with many employees noting 'video call fatigue' and craving real human interaction. A survey by Monster, the jobs website, found that more than 50 percent of respondents who are teleworking due to the pandemic are experiencing burnout," reports the Financial Times.
"The lockdown will accelerate the development and use of AI tools to monitor and manage the mental wellbeing of remote workers," says Lee Howells, automation and AI expert at PA Consulting, a management consultancy, in FT. "Automated calls are able to detect signs of depression in staff by tracking sentiment in voice and language, as well as levels of engagement and focus through monitoring typing speed, rhythm and force."
Rob Calise of Hilb Group New England, warns in a column in GoLocal, "With the unprecedented COVID-19 outbreak, it’s no surprise that workers are feeling stressed. Uncertainty about their health, finances and the future may be overwhelming. During a crisis like we’re facing, there are things employers can do to help employees cope both personally and professionally."
While today, much of downtown Providence's workforce is working offsite, Fair believes Providence's smaller size and ability to easily commute remains an asset -- especially as compared to larger cities.
"Providence is positioned much better than the larger/denser markets like Boston and New York and has the chance to benefit from the migration out of the big cities. My office is actively working a few large office requirements for tenants that were looking to expand in Boston or New York at the end of 2019, but are now considering shifting their expansion plans to RI which will allow them to keep their workforce intact and allow them to operate in a less dense and safer office environment," said Fair.
"Fingers crossed we get through to a vaccine soon and with any luck, Providence may end up winning the day stealing some growth from our larger market neighbors due to our smaller and less dense option," said Fair.