SEATTLE — Microsoft was among the first corporate giants to send workers home at the start of the coronavirus pandemic.
Now, it’s taking steps to let many of those employees work remotely permanently.
The company’s head of human resources, Kathleen Hogan, sent guidelines to managers Sunday laying out new instructions to let employees do their jobs from home for half their work hours. And the new guidelines lay out considerations for managers to mull with employees who want to work remotely more than half the time.
In March, as the coronavirus first spread, Microsoft moved to shut down its offices and require most of its staff to work from home. In May, it extended the work-from-home mandate to October, though it allowed some of its 163,000 workers around the globe to voluntarily return to their offices in stages.
At the time, Microsoft President Brad Smith said the company expected to bring back employees “more slowly rather than more quickly because, economically, we can serve the economy with more remote work than people in many industries can.”
And in July, the company said it wouldn’t fully reopen its offices until January at the earliest.
The move to make work from home permanent isn’t without precedent. In May, Twitter told its workers whose jobs didn’t require them to be on site that they could continue working remotely forever. A month later, Slack offered its workers a similar option.
The new Microsoft guidelines, first reported by the Verge, won’t apply to employees whose jobs require them to be on site. The company didn’t disclose how many workers it expected to adopt the new rules.
Earlier this week, Microsoft CEO Satya Nadella seemed to make a case for working in the office at least some of the time. Spending too much time on video calls can make employees tired, and working from home can make it difficult to transition from corporate to private life, he said.
“When you are working from home, it sometimes feels like you are sleeping at work,” Nadella said, speaking at The Wall Street Journal CEO Council Tuesday.
Microsoft’s new guidelines will likely make it harder for local commercial real estate to climb out of the pandemic’s economic trough, real estate experts said.
The company is an outsize presence in the regional commercial real estate market, occupying 14.4 million square feet in King County. Its sprawling, 520-acre Redmond campus — where, in pre-pandemic times, most of the company’s 54,000 Washington state employees flocked to work each day — represents nearly one-fifth of all the leased office space on the Eastside.
Even before Microsoft’s latest workplace policy change, office occupancy in the Seattle metro area wasn’t expected to return to pre-pandemic levels until 2024 at the earliest, said Rod Kauffman, president of the local Building Owners and Managers Association. Microsoft’s newest policy shift “may extend the recovery of commercial real estate a little longer,” he said.
Vacancy rates have ticked upward, from roughly 6% to 7%, during the pandemic, though they remain near historic lows, according to reports from commercial brokerages. The amount of space available for sublease, however, has risen to levels not seen since 2009, according to the Broderick Group, a commercial brokerage. That rise likely indicates tenants are looking for ways to offload their space before they can exit their leases.
In the long term, though, even Microsoft isn’t abandoning offices. The company’s multibillion-dollar renovation of its Redmond campus, launched in 2017, is still underway and will likely wrap up in 2023, according to the company. The renovation adds 2.5 million new square feet of workspace.
Other office projects, too, are still in the works. Skanska is proceeding with a 25-story office tower in downtown Bellevue. Lincoln Property Co. West is obtaining permits for a 13-story office tower above the new University District light rail station. Martin Selig Real Estate relaunched construction on an office tower at 400 Westlake Ave. this week.
“We’re working on a number of projects that are going to accommodate heads-down workspace. Most of our clients are … staying the course until we know more,” said Seattle commercial architect Patrick Gordon, a principal at ZGF. The firm counts Microsoft among its clients, but Gordon said he was not authorized to discuss the company specifically.
Seattle Times business reporter Katherine Khashimova Long and Bloomberg contributed to this report.