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Will the remote work craze sparked by COVID-19 sound a death knell for office buildings?

Summary

Elliott Holt was always firmly opposed to letting employees work from home. “There’s no control over it,” says the CEO of a Nashville-based medical records company. “We like to be in control.” With MediCopy growing at breakneck speed, its work-in-the […]

Elliott Holt was always firmly opposed to letting employees work from home.

“There’s no control over it,” says the CEO of a Nashville-based medical records company. “We like to be in control.”

With MediCopy growing at breakneck speed, its work-in-the office ethos spelled a feverish expansion of its physical presence in Nashville. After adding a second office two years ago, the firm was poised to lease a third last month.

But since the coronavirus pandemic has forced nearly all of MediCopy’s 200 employees to work from home, Holt has had an abrupt change of heart. He says he’ll let staffers continue to telecommute for the long term, prompting him to relinquish both of the additional offices, convert his headquarters into a training center, and save $350,000 a year in leasing costs.

“Things are working the way they are,” he says. As states lift stay-at-home orders and gradually let businesses reopen, companies are gingerly allowing white-collar workers to return to office buildings even while weighing how much they really need the space. About half of U.S. employees worked from home during the COVID-19 shutdowns, according to the Brookings Institution. And many companies – including Facebook, Google, Twitter and Morgan Stanley – plan to continue allowing at least some staffers to telework at least some of the time even after a vaccine is available and the health crisis is over. That could mean a seismic downsizing of the $2.5-trillion office market and the vibrant urban centers that have flourished around them, battering the restaurants, bars and high-end retailers that rely on white-collar workers’ lunch and after-work spending.

“The genie is out of the bottle,” with many companies now embracing remote work, says Victor Calanog, head commercial real estate economics at Moody’s Analytics. And if there’s a major shift to telecommuting, “Do we really need that much office space?”

Downtowns, he says, could become speckled with gleaming, hulking office-building skeletons that resemble industrial relics in cities like Cleveland or Detroit or the growing crop of empty retail spaces in, well, virtually any American city.

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