ACRE / BOMA OFFICE GUIDE enhancing the tenant experience and will give employees another reason to return to the office .”
Pre-pandemic , building owners enjoyed some pretty good times and what was largely a landlord ’ s market . Despite rates holding for the moment , Kidder Mathews ’ Walker says it is likely rates will drop in the next year or so as tenants become more aggressive in negotiating deals . He adds that landlords are offering a “ crazy amount ” of broker incentives right now to get their spaces onto broker tours so they can fill vacancies and retain tenants .
“ If you have a tour and there ’ s 20 options , you ’ re not touring 20 ,” Walker says . “ You ’ ve got to whittle it down to maybe your top six candidates and so landlords want to make sure they ’ re one of them .”
Two Steps Forward , One Step Back New industries gaining a foothold in the area such as life sciences are helping to keep the market active and rates steady , as are tech firms moving from the Bay Area . Thomas of Cushman & Wakefield says he expects some international firms to come to the area this year and he ’ s also seeing Sacramento companies that are in growth mode and requiring more physical space , even when factoring in a hybrid work model .
Even when businesses do set a goal of returning to the office this year , how they return is still a bit up in the air . Employees could return two or three days a week , full time , not at all , or there could be more emphasis placed on using the office as a collaborative or meeting space . Some businesses may find they need an increase in space based on a desire to put more people in private offices or spread out cubes . With the pandemic finally showing signs of receding , companies will soon have to make decisions on how they plan to operate going forward .
“ The positive news is we are starting to see many more tours , much more activity in the marketplace ,” Thomas says . “ Tenants feel like they ’ re starting to get their footing underneath them . These last two years , with most of — if not all — their employees working remotely , it ’ s been very hard for companies to make long-term real estate decisions about their office space .”
“ I do think we ’ ll still be in somewhat choppy waters with existing companies as they near or approach their lease expirations and how they ultimately decide to address their own individual flex work strategy ,” Thomas adds . “ I do think we ’ ll continue to see some companies downsize — or right size — which means we ’ ll see more vacancy come back . So , I think it literally could be a two steps forward , one step back type of market for the next 12 months .”
Ken Smith is a freelance writer , public relations consultant and video producer who is also managing editor of Sierra Sacramento Valley Medicine magazine . More at kdscommunications . com .
The State of the State
DGS CONSIDERS ITS WORKFORCE OPTIONS
The COVID-19 pandemic has impacted nearly every employer and every workforce , including the State of California . To protect employees and slow the spread of the virus , remote work became a requirement for many office jobs . Now the question becomes how much of the state workforce will return to offices .
“ The pandemic required us to reevaluate how the state workforce operates ,” says Monica Hassan , deputy director of the Department of General Services . “ Many departments will require staff to be back in the office , while others will have staff that work from home or a combination of both . The Departments of General Services and Human Resources continue to provide guidance along the way and to work collaboratively in the best interest of all our employees and the people we serve . The state is in the process of transitioning to permanent telework post-pandemic .”
Hassan says that during the pandemic shutdown , approximately half the state ’ s workforce of a little more than 200,000 people worked from home , while the other half continued to report to duty in the field , such as fish and game wardens and highway patrol officers , or in institutions like the state ’ s correctional facilities and hospitals .
At present , state departments are transitioning to ongoing telework , with employees entering into telework agreements with leadership based on department business needs and if employees ’ essential job functions are conducive to telework .
“ Not all positions or job classifications may be appropriate for telework arrangements and departments have the discretion to determine an employee ’ s participation in telework ,” Hassan says . “ All employees in positions designated by management as eligible shall be qualified to participate in telework and are authorized to participate to the fullest extent possible without diminished individual or organizational performance .”
As the state works to determine the scope of officecentered and remote-centered workforces , future office space plans won ’ t be firmed up until at least December . As described in the January 2022 budget , “ In support of the Administration ’ s goal of leveraging telework strategies to improve government efficiency , DGS is working to reduce the state ’ s leased portfolio of office space . In total , state agencies lease approximately 23.2 million total square feet , of which approximately 14.4 million square feet is office space . While DGS has prioritized working with its largest leasing clients , the department is working with 24 state agencies across 86 individual leases to consolidate space . This effort has resulted in 767,000 square feet of office space relinquished , equating to an annual savings of approximately $ 22.5 million . Over the next three years , DGS is projecting a 20 percent overall space reduction in the state ’ s leased office space portfolio , which will realize approximately $ 84.7 million in annual savings .”
― Jennifer von Geldern
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