Brandon Donnelly

Daily insights for city builders, delivered every morning at 6 AM ET. I’m Brandon Donnelly — a Toronto-based real estate developer and founder of Globizen. I’ve been writing here since 2013.

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Tag: office space

  • Checking in on office utilization in Toronto

    Let’s check in on office utilization (in Toronto). The last time we talked about this was in April. At that time, the average weekly utilization figure was 63%. The peak day — Wednesday — was 73%. And the low day — Friday — was 40%. Today, well as of September 15, these numbers are now 69%, 79%, and 39%, respectively (see above chart). So we continue to climb. The only slight downward trend is Fridays. People don’t like coming into the office on Fridays. Still, the average is up 6% over the span of about 6 months. This makes you continue to wonder: When does this level off? I also don’t know what this index looked like before 2020. Are we back, or not yet?

  • Street-level offices

    One of the things that I have noticed while walking around Lyon is that there seems to be a lot of office space right at street level.

    And most of it does not seem to have a consumer-facing element where people just walk in off the street.

    There’s something nice about seeing beautiful spaces and people sitting at their desks (I walked past people sitting on exercise balls). It’s another way of animating the street.

    Personally, I’d love to have an office right at ground level, similar to the above. But it’s not usually where our minds immediately go. We usually default to retail. Or at least I do.

    So I’m going to work to remove this blind spot from my mental models. Office right on the street can clearly work really work.

  • “Offices are over”

    This is an interesting article from Brookings that talks about the “myths of converting offices into housing.” What I especially like about the article is that it’s nuanced, and it directly addresses many of the myths that currently surround offices. The first one is that “offices are over.”

    Regular readers of this blog will know that I don’t agree with this. And the article provides some good data points to support this:

    • Office utilization may be below pre-pandemic levels in many cities, but the data suggests that we have not yet hit a plateau. Utilization rates continue to increase, albeit gradually. So if we are to be more precise here, it’s not that some people will never return to the office, it’s just that it’s taking longer than I think many people expected.
    • That said, this is not the case in all cities. Downtown Salt Lake City, as we have talked about before, is the busiest it has ever been. Similarly, ridership on the Utah Transit Authority network is up 26% from pre-pandemic levels.
    • Europe is generally ahead of North America with utilization rates in the 70-90% range, according to JLL. And Asia is even further ahead with rates in the 80-110% range. Meaning that, similar to downtown Salt Lake City, there are (many?) cities in Asia where more people are in the office today compared to in 2019.

    So I would not be so quick to claim that “offices are over.”

    For the full article, click here.

  • Royal Bank of Canada to employees: “Get back in the office”

    Royal Bank of Canada, which is one of the largest employers in the country, sent an internal memo to employees this week with statements like these:

    “When our teams come together on-site more frequently, we are solving complex problems faster, learning and growing more effectively, and ultimately building deeper connections with one another.”

    “Without frequent in-person engagement our long-term competitiveness is at risk.”

    I feel strongly that we are going to continue to see more of this. Current work-from-home arrangements are not at all static. We have not yet reached a post-pandemic equilibrium. That will likely take a few more years.

    More flexibility, rather than less, is something we all want, and I don’t believe that’s going away. But I do believe that for the most productive and congealed teams, the default workplace will remain the office.

    P.S. Office Space (embedded video above) is a great movie.

  • How many days a week are you in the office?

    At the end of August, our office closed for two weeks so that we could shuffle a bunch of desks around. During that time, we all worked remotely. I spent one week working from home and one week working from Utah. Being in Utah in the summer was, of course, a great treat. Everybody appreciates having more rather than less flexibility in how they structure their workday.

    But at the same time, being away from the office reminded me just how much I hate working from home. I hate the onslaught of calls and zooms that ensue when you’re not proximate to the people you work with. I hate being distracted by the thought that I should probably do a load of laundry. And importantly, I also find that I have less energy.

    One of the ways that extroverts and introverts are often defined is according to where they derive their energy from. The former is said to derive more of their energy from being around other people and the latter is said to derive their energy from being by themselves. Introverts need time to recharge. Of course, most people probably need both of these things. I certainly do.

    But I think this is an important consideration as we all debate work-from-home policies. I enjoy being in the office. And I can tell you that our team overwhelmingly does as well. People were starting to get antsy during our two week hiatus. But not everybody feels the same way, which is why I wasn’t expecting this (the above) Twitter poll result.

    At the time of writing this post there were fewer than 200 responses. But even with limited data points, I was expecting more of a bell curve, with the majority of people doing some sort of hybrid thing. That is not the case here. The results were fairly equal with 5 days a week having a slight edge. My sense is that WFH is continuing to wane.

    But I don’t know, you tell me: What is your work routine right now and what would you consider optimal?

  • Workplace occupancy-sensor company raises $125 million funding round

    Density, which is a company that provides occupancy-tracking sensors, announced this week that it has just completed a $125 million funding round at a ~$1 billion valuation. This is their Series D. Official announcements, here and here.

    On a practical level, the company provides workplace space analytics. They offer sensors that allow companies to anonymously measure how people are using their offices.

    How long people are at their desks for (possibly weird), which conference rooms are most used, where people socialize, and so on. With the idea being that if you measure it, you can then optimize it. It’s about how to best use your real estate.

    But their overarching mission is “to measure and improve out footprint on the world.” Their ambitions seem to go beyond just office space. It’s about how we occupy our cities, and using analytics to more efficiently design and build them going forward. And that’s pretty interesting.

    I’m not intimately familiar with the company, but I thought I would share the news with all of you in case you’d also like to check them out.

  • What will be the new New York City?

    Peggy Noonan argues, in this recent WSJ article, that the world has changed forever. A human habit was broken during this pandemic and city life, including office life, will never be the same in New York City. She qualifies this by saying that some people will return to offices, potentially in significant numbers. (People like being around other people.) But that things will never be what they once were. We’ve learned that we can decentralize and still get work done.

    As many of you know, I am bullish on cities and I am bullish on offices. So I found myself disagreeing with many of her arguments. But Peggy does raise some valid concerns: How are cities going to pay for what just happened over the last 12 months? According to the Partnership for New York City, the city lost about 500,000 private-sector jobs since March 2020. About 300,000 residents from high-income neighborhoods also filed for a “change of the address” during this time period.

    Given that the top 5% in New York represent about 62% of the state’s income tax base, the movement of people to low-tax states (and warmer places) is something to watch. It’s also a trend that existed well before this pandemic.

    At the same time, I’m not necessarily convinced that (at least some of) these fleeing rich people aren’t coming back. I was speaking with a real estate agent over the weekend who is based in a popular US resort/recreation market and while he told me that, yes, he’s seeing a massive influx of people from expensive coastal markets, these people are largely choosing to rent. They want to take the lifestyle for a test drive and they are also waiting to see what happens with the world once city life returns.

    There will be real financial challenges coming out of this. But as I’ve said time and time before, cities are remarkably resilient. And as Jack Shafer argued in this recent article about “memorializing the pandemic,” humans tend to have short memories, especially when it comes to bad things. The Spanish Flu has been regarded by many as a forgotten pandemic. We moved on and the same will happen this time around.

  • We’re all going back to offices — most of us anyway

    I was speaking with a writer from the Globe & Mail today about the future of office. We were half talking about a new AAA strata office building — called Capital Point — that we (Slate) are in the midst of launching in the Metrotown neighborhood of Burnaby, BC. And we were half talking about whether or not we’re all going to return to offices.

    This is one of the great debates of the pandemic but, as I mentioned in my 2021 predictions post, I think it’s overblown. The longer I work from home and spend my entire day on video calls (only to start actual work in the evening), the more I become convinced that this is a suboptimal arrangement for productivity, collaboration, personal motivation, employee morale, and talent retention (among many other things).

    We have complete conviction around great offices in the right locations. That’s why Amazon and whoever else continue to build. They’re rightly looking past this period of dislocation (12-24 months of suck). Again, this is not to say that there won’t be some changes and that certain pre-existing trends haven’t been accelerated, because they have been. But I believe that humans will continue to cluster for work.

    In fact, it’s hard to disentangle cities and offices. Cities are labor markets. It’s where agglomeration economies take hold and where people come to improve their socioeconomic standing in the world (as well as meet people and have fun). To say that we no longer need to come together in person for work is to say, in a way, that we no longer need cities. We can all decentralize.

    That is not a bet that I am prepared to make.

    For more information about Capital Point and to register for the project, click here.

  • Amazon reveals spiraling building design for HQ2 office campus

    Amazon unveiled the design for part of its new HQ2 campus in Arlington today. The plan is a cluster of new office and retail buildings that will accommodate some 13,000 employees. When fully built out, its HQ2 is expected to house upwards of 25,000 employees.

    The centerpiece of the proposed campus is something that is being called the Helix, which is a spiraling building with outdoor walkways housing native trees and plants from the Virginia area. The idea is that it will become a place for people to go for walks and hikes “outside.”

    Here’s what that looks like (image from architecture firm NBBJ):

    In addition to a cool spiraling building, it’s of course also noteworthy that Amazon (along with many other companies) is continuing to forge ahead with its plans to build and occupy more office space in important urban centers.

    Here’s a quote from a recent WSJ article talking about the HQ2 announcement:

    While numerous tech firms have pledged to allow employees to work from home even after the coronavirus pandemic is contained, Amazon, Facebook Inc., Alphabet Inc.’s Google and others have continued to expand their urban office footprints. By investing heavily in big city real estate, they are betting that office space will be an important part of their corporate culture after the pandemic is over.

    “We have to think about this as a long-term investment,” said John Schoettler, Amazon’s vice president of global real estate and facilities. “These buildings will begin to deliver in 2025. And so we believe that the world will be a much improved place than it is currently.”

    Like most companies, they are naturally questioning to what extent some employees won’t be going into the office every weekday. But even still, the above announcement is yet another great example of why office space — and spiraling outdoor spaces — will continue to form an important part of the future of work.

  • A few thoughts on working from home/anywhere

    One of the big questions for this year is about whether or not work from home (WFH) and work from anywhere (WFA) policies are going to stick following this pandemic. It’s something that I mentioned in my 2021 predictions at the beginning of this year because it is something that would obviously have a massive ripple effect. So today I thought that it would be interesting to look back on data and articles that were published prior to 2020, before everyone really started prognosticating about the rise of fully distributed workforces.

    What is clear, at least from census data, is that working from home was on the rise before COVID-19, but that it still only represented a relatively small percentage of the overall workforce. The numbers are significantly higher if you consider people who maybe occasionally worked from home, but for those who were 100% remote, it was estimated to be only about 5.2% of the US workforce in 2017 (~8 million people), about 5% in 2016, and about 3.3% in 2000. But the question still remains: Now that many/most people have had a taste of the increased flexibility, to what extent will it stick?

    There’s a ton of research out there about the impacts of working remotely — covering everything from productivity to morale. But one takeaway that makes intuitive sense to me is that WFH/WFA flexibility is perhaps best when two things are present: 1) the employees already know how to do their job really well and 2) the work that these employees are doing is fairly independent.

    The corollary to this is that remote work is probably not the best environment for newer and younger employees who would benefit from being around other more experienced people, and for situations where collaboration among coworkers and outside humans is essential for the job. When I think of the job of a real estate developer, I would place it high on the collaboration scale. Building a building involves a full orchestra of people that all need to be playing in sync. Personally, I find that easier to do when you’re sitting across a table.

    My belief continues to be that we are are greatly exaggerating the extent to which work is going to disperse in the short-term. I recognize the trend line that existed prior to this pandemic and I recognize that some jobs are perhaps well suited to decentralization. But I think we will continue to see real limits on how much of this sticks as we move past this moment in time and into 2022.