Thursday, July 9, 2020

It's time to short commercial real estate

One result of the Kung Flu is that companies are learning that their employees are able to work effectively from home, via video conference and messaging/collaboration applications.  We're beginning to see the implications of this for commercial office space:

Fujitsu is to permanently shutter one half of its office real estate in Japan and will ask 80,000 locals to work from home permanently as it redefines work culture internally in the wake of the COVID-19 outbreak.

Under the auspices of the Work Life Shift campaign, Fujitsu is to study data of how employees use offices, with a view of giving them more tools and options to work from home, at hubs or be more mobile.

“For employees in Japan, this latest initiative will mark the end of the conventional notion of commuting to and from offices, while simultaneously granting them a higher degree of autonomy based on the principle of trust,” Fujitsu said today.

File this under "Well, duh!"

Fujitsu is fixin' to save a boatload on office rent.  That savings will go 100% to the bottom line.  Probably their employees will be happier, too - the Tokyo subway system is famously crowded, and not having to do 90 minutes each way on that will be a nice bonus for Fujitsu's employees.  It will be a financial bonus, too, since they won't have to buy subway tickets.  It's sure as shootin' Fujitsu won't be the only company that decides to do this.

The losers will be the companies that rent office space.  And the subway system.

Obligatory disclaimer: I work for a company that makes video meeting apps.  It's interesting, having done this for a decade; it's gone from "we're living in the future" to "well duh, everyone wants this".


Jonathan H said...

Cities have been losing office space for years due to high costs, long commutes, and the high salaries that come with big cities. This will make it worse.
However, I'm curious how many workers will be able telework long term? How many do sensitive work they can't take home, need to be on site for lab work, security, quality control, manufacturing, etc?

One factor that is not usually mentioned in discussions like this is internet availability. Telecom companies are increasingly focusing on the cities and ignoring rural and suburban fringe areas. For example, where I live, on the fringes of suburbia, cable service (and with it cable internet) stops 2 houses down the street because the power line stops following the road and the cable company won't run lines anywhere they can't reliably take a truck. My only options are wireless systems, either cellular or satellite, both of which have limitations compared land line services.

Even where providers aren't ignoring possible customers, right now there are enough bandwidth issues that connection speeds are bogging down in many places. Is your company looking for ways to reduce bandwidth use and streamline communications?

Unknown said...

At the moment, I'm sitting in a room that will soon hit 100°F, and I'm psyching myself up to head out to the garage where the window-shaker air conditioner is stored, to pull it out.
I'm in a home with old wiring, so I took some time to find a window near an appropriate outlet that doesn't already have medium-to-heavy loads on the circuit.
The chandelier above me has a parachute-cloth laundry bag stretched under it, so that I could have enough diffusion to be visible and not blinded for the first zoom call of March -- it worked well, so it has stayed that way. We aren't entertaining with dinner parties, so I'm not kicked out of using the dining room as an office as I would be in normal times.

If this becomes permanent, I can work from home, and there will be many things that I spend less on. There will also be many permanent changes to my home made, and those cost real money, as I've a spouse with the crazy idea that dining rooms should be for dining in. I can self-install a ducted mini-split heat pump, and what I pay for quiet cooling will be somewhat offset by what I save in heating costs during the part of the year when the numbers on the °F scale are still in the positive. But before then I need an additional subpanel, or a main panel with room for more breakers, and should really have a service upgrade that doubles the amps of the panel. I'm still driving in because it takes less time to drive to the office, upload the massive media files that I need to upload, and drive home than it takes for them to upload via my cable-internet, so that will be a few hundred a month more in expenses also, necessary but not reimbursable under the rules of my agency.

In thinking about it, a lot of my friends who do that same sort of work that I do but as freelancers end up renting commercial space. Some get a sweetheart deal on it from a principal client that has excess divisible space, and others go into a consortium with other freelancers with similar needs in a larger shared lease. The ones who have been working entirely from home have either moved into new-to-them homes with suitable extra space, or done renovations/additions to perfectly tailor the work environment behind a door that separates it from family time.

Ted said...

I do Data Analytics for a large health care company. I'm provided with an encrypted laptop and an encrypted VPN connection to the Data that's in another location in any case. All my communication with my co workers and internal "customers" are done via encrypted email and We use multifactor ID's so basically not different from being in the office except for the regular twice weekly time wasting team meetings which are now done via Gotomeeting. ( NOT Zoom ) .

I can work from anywhere with a Highspeed Data connection. ... and my laptop will handle the multiple displays that I need to be able to write quires .

The days of working from your cube in a downtown high rise are over, now that companies have discovered that they can "offshore" a large portion of their office space expense to to their employees household budgets.

ASM826 said...

Even if we return to individual offices, all group meetings will be be video, that decision has already been made.

Old NFO said...

Glad I'm out of the workforce.

drjim said...

Agree with Old_NFO.

Toirdhealbheach Beucail said...

We have been working from home for almost four months now, except for those individuals that absolutely have to be on site to do their jobs. I cannot imagine we will go back before the end of the year, if at all. People are asking what the company intends to do once everything is "back to normal", but the company is kicking the can down the road. I think they will hit resistance if they suggest everyone goes back to the office because the sense will be that for 80% of us, we have done our jobs effectively from home and remotely for the last XX months. Why would we need to go in? To make management feel better about being able to see us?

Glen Filthie said...

Up here in Canukistan the Libranos have been using Chinkypox to go after the churches. They opened the casinos and bars before they allowed the churches to open. It didn't slow them down a bit, they all just did the zoom thing too. All the old folks learned how to do electronic banking and it's hilarious - some of the geezers that used to balk at ATM's and insist on live tellers at the bank - are no embracing Alt Tech and asking questions about crypto currencies. Some of those old fossils are probably just as savvy as BP is now, HAR HAR HAR!)

We are watching history the same way those old geezers did when they watched the plants and factories close.