Month: May 2020

Silicon Valley renders itself obsolete

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Out of habit, inertia, or just a plain fear of change, many white-collar workplaces have avoided allowing employees to regularly work from home — but that may soon change. Plenty of so-called knowledge workers are finding that they can comfortably do their job from just about anywhere they have a wifi connection and their laptop. Large majorities of workers in the consulting & research (85%), insurance (84%), advertising and marketing (73%), finance and financial services (70%), legal (68%) industries have been doing their jobs remotely as a result of the coronavirus outbreak, according to the NBC|SurveyMonkey data. Among these same workers, most report wanting to either work from home all the time even when it is safe to return to the office, or at least wanting to work from home more often than previously.

Source: How Silicon Valley work-from-home ‘forever’ will hit every worker

Silicon Valley as a centralized work location has essentially rendered itself obsolete. In its early days, it was all about location. It had fertile mix of engineering talent, proximity to Stanford University and the larger San Francisco Bay Area as well as plenty of space for microchip and computer manufacturing plants run by household names such as Intel, Hewlett Packard and Apple Computer.

People and place combined to make Silicon Valley what it is. Or was. Now the world changing information and communications technologies it innovated as this article points out allow knowledge work to be done most anywhere, regardless of location. Even Silicon Valley.

And not a moment too soon as high housing costs and long commutes over congested freeways have made it a less desirable place to work. But Silicon Valley certainly deserves kudos. Its products have helped shrink the time and distance burden of daily commuting, benefiting knowledge workers wherever they make their homes.

Zillow survey suggests housing preferences could be upended in a post-pandemic America, leading to major questions about the future of dense metro cores

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SEATTLE, May 13, 2020 /PRNewswire/ — Where people choose to live has traditionally been tied to where they work, a dynamic that through the past decade spurred extreme home value growth and an affordability crisis in coastal job centers. But the post-pandemic recovery could mitigate or even produce the opposite effect and drive a boom in secondary cities and exurbs, prompted not by a fear of density but by a seismic shift toward remote work.

Source: http://zillow.mediaroom.com/2020-05-13-A-Rise-in-Remote-Work-Could-Lead-to-a-New-Suburban-Boom#Closed

This is consistent with a long tern trend I discuss in my recently published eBook Last Rush Hour: The Decentralization of Knowledge Work in the Twenty-First Century. Before the maturation of Information and Communications Technology (ICT) that enables knowledge workers to work from most anywhere with good Internet connectivity, the length of the commute to the office was a paramount consideration in terms of where people chose to live. ICT has reduced its importance since it shrinks time and distance. The personal computer is the automobile of the information economy and the Internet is the highway.

The current SARS-CoV-2 pandemic and social distancing out of centralized commuter offices (CCOs) demonstrated to knowledge workers and their their organizations it’s no longer necessary to commute every workday to a CCO.

We’ll see varying degrees of migration out of CCOs in the coming years. Some will continue to be used part of the week or as meeting spaces for larger gatherings. Other organizations will opt to go fully virtual and shut down their offices.

State of California looks to reduce office space requirements, citing “increased remote workforce.”

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California Gov. Gavin Newsom’s revised budget for FY 2021 is seeking considerable savings over the budget his administration proposed in January prior to the COVID-19 pandemic and sharp economic contraction that’s expected to drastically reduce tax revenues.

A component of the May Revise budget proposal would examine cutting the state’s real estate costs in light of state employees increasingly working outside of centralized commute-in offices as a disease control measure during the pandemic. This signals that the Newsom administration sees the shift as one that can be permanently adopted going forward.

With an increased remote workforce, the Administration, led by the Department of General Services (DGS), will evaluate the state’s real estate portfolio to determine which agencies and departments may be able to reduce lease space. Agencies and departments may be able to reconfigure their workspace to include additional meeting rooms and hoteling space, thereby reducing their lease footprint. Reducing space will decrease not only lease costs, but also energy costs. Additionally, DGS will look for possible restacking opportunities in state-owned buildings.

NYT: Big Apple facing inflection point on centralized, commute-in offices

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But now, as the pandemic eases its grip, companies are considering not just how to safely bring back employees, but whether all of them need to come back at all. They were forced by the crisis to figure out how to function productively with workers operating from home — and realized unexpectedly that it was not all bad. If that’s the case, they are now wondering whether it’s worth continuing to spend as much money on Manhattan’s exorbitant commercial rents. They are also mindful that public health considerations might make the packed workplaces of the recent past less viable.

“Is it really necessary?” said Diane M. Ramirez, the chief executive of Halstead, the real estate company, which has more than a thousand agents in the New York region. “I’m thinking long and hard about it. Looking forward, are people going to want to crowd into offices?”

Once the dust settles, and companies make their decisions, New York City could face a real estate reckoning.

Source: Coronavirus Live Updates: Top Health Experts Paint Bleak Picture of Pandemic – The New York Times