The cost of office maintenance dropped significantly in the pandemic when workers went remote and companies saved money on services like cleaning and security, as well as perks like dry cleaning and endless pantry snacks.
But as employees begin to head back to the office, the cost of running the workplace is increasing.
By December, about 40% of workers had returned at least part time, although the omicron variant of the coronavirus has put a chill on return-to-office plans. And developers still expect that employees will be back on-site in the long run, even if hybrid work becomes more common. CP Group, which owns and manages 32 office buildings, mostly in the Southeast and Southwest, has bought $1.2 billion of office space since May, a wager that staffs will return.
More robust air filtration and newly installed outdoor spaces are among the items that will add to developers’ costs when more employees return. New cleaning practices may make those services more expensive.
“Operating expenses were down a bit in 2020,” said Kristin Mueller, chief operating officer for property management at JLL, a real estate services company that oversees more than 1,000 office buildings across the United States. “For 2022 properties budgets, we are anticipating modest overall increases.”
The cost to run the office today remains lower than pre-pandemic levels, but not as significantly as many managers expected, Mueller said.
Having fewer employees on-site translates to less daily cleaning and trash collection, for instance, but those reduced janitorial services are often countered by directives for deep disinfecting, as well as higher labor costs for maintenance. And spending on supplies like coffee filters, pens and paper towels may be down, but they have been replaced by purchases like hand sanitizer and masks.
Because the coronavirus is spread by air, one of the most significant changes in building operation has been a focus on air quality. Many companies are scrutinizing their ventilation, which could involve installing more robust air filters to screen out virus particles, for example, or replacing the building’s air more frequently. Water and electricity use may be lower than usual, but even with fewer people in the building, heating, ventilation and air conditioning systems costs have probably increased.
The Centers for Disease Control and Prevention lists ways buildings can improve ventilation, like by running HVAC systems at maximum for two hours before and after buildings are occupied.
Employers are paying attention to air quality as never before, said Nellie Brown, a health and safety specialist with Cornell University’s School of Industrial and Labor Relations.
“If you don’t spend money on upgrading your ventilation, you might be spending it on sick people,” Brown said.
She added that these upgrades could have helped reduce the spread of the seasonal flu in years past had they been in place.
Upgrading HVAC systems can be expensive and add monthly costs. New equipment for a typical 100,000-square-foot office building in Chicago, for example, might cost up to $100,000 to install, Mueller said, and can add 5% to 10% to monthly bills. For offices in milder climates, just opening the windows can increase air quality, although many office windows do not open.
Building managers are creating more rooftop and patio spaces for workers. Maintaining those spaces will mean additional costs, like heating or cooling, but Angelo Bianco, CP Group’s managing partner, said his company was adding outdoor lounge space “to every building we own.” Some new designs focus on flexible indoor-outdoor spaces, like an airy lobby coffee shop with indoor seating and garage-door type walls that can be opened to patio space.
Adding outdoor spaces was already a trend before the pandemic, but “now it is elevated in priority,” said Greg Smith, CEO of Urban Visions, a Seattle developer. He has three projects set to open in the next few years, and each one offers significant outdoor venues.
“The era of stuffing people into offices like sardines is over,” he said.
Some office building changes are more about peace of mind than actual effect, like shifting overnight janitorial staff to daytime hours so employees see the building being cleaned.
“If the building doesn’t feel safe, they will not enter it,” Mueller said.
Updating employees on building infrastructure is another pandemic-inspired practice.
“Until 18 months ago, almost nobody cared about ‘healthy buildings,’” Bianco said. “That’s irrevocably changed.”
Now employees might be asking how often air filters are cleaned and about their effectiveness. Brown, of Cornell, has been offering training sessions for building managers to help them explain air filtration systems to their employees. Companies need to rethink their maintenance costs with the future in mind.
“We can’t go back to the way we were,” she said.
Before the pandemic, developers were already offering services like dry cleaning, shoe repair and grocery pickup. As employers compete for talent now, Smith said, creating an environment that has the right amenities is part of hiring and retention. These might include workout facilities, showers, health clinics, indoor and outdoor greenery, bicycle parking or lockers where packages can be delivered.
One of the pandemic’s biggest challenges has been child care, which many workers have cited as a reason to work from home or quit jobs altogether. Recognizing this struggle, Bianco said his properties were building more on-site child care facilities to accommodate parents.
“The question is, ‘Why would employees want to come back, and what amenities do I need to provide?’ ” Smith said, adding that when he talks to the interested tenants, “everything is on the table.”
Some cost-saving work-from-home habits are accompanying employees back to the office. At Turner & Townsend, a consulting firm with 750 employees, printing and copying costs are still only 15% of what they were, said James McDade, the company’s chief financial officer for North America. Workers got used to sharing documents on screen rather than handing out copies.
“Spending on basic office supplies will never go back to pre-pandemic levels,” he said, “because we just work differently now.”