Offices Get Upgraded Amid Remote Shift --- Companies are still betting employees would benefit from regular office use

"Medical-software provider CentralReach decided last year to allow all 373 of its employees to work remotely on a permanent basis. Then the company signed a lease for a splashy new office.

CentralReach's office deal is the latest sign that even companies embracing remote and hybrid work still may want new workspaces, betting that employee collaboration would benefit from regular office use.

The company is relocating to the Bell Works development in Holmdel, N.J., in September. CentralReach will occupy 25,000 square feet of space, the largest office footprint ever for the 10-year-old company. Its current office is in an aging building in nearby Matawan, N.J., and it has sat mostly empty during the pandemic.

CentralReach's modern headquarters is a way to entice employees back to the office without having to force them, said Chief Executive Chris Sullens. A common kitchen area will feature an island with bar chairs, and collaborative work areas will offer couches and armchairs. There will be fewer assigned desks and more wheeled furniture and whiteboards.

"I want people to take advantage of the office, but I want them to do it in a way that makes sense where they're not wasting time commuting when they don't have to," Mr. Sullens said.

CentralReach's new home offers some encouraging news for office-building owners, who have worried that the rise of remote work might lead some companies to cut costs by dumping most or all workspace. Many companies are finding they prefer a mix.

But CentralReach's new headquarters signals other challenges for property owners. Companies are largely shunning older buildings and usually need less space overall. Even though CentralReach's new office will be larger than the one it is leaving, the company is hiring more staff and anticipates it will ultimately have less space per employee.

Companies say they can have a smaller office footprint under a hybrid approach. If all employees were to come in five days a week, CentralReach would have leased two to three times as much space, Mr. Sullens said. Instead, he expects only about a quarter of the company's local workforce to be in the office on a typical day.

Ralph Zucker, CEO of Bell Works developer Somerset Development, said a number of companies relocating to the complex are downsizing from larger spaces. One new tenant is leaving behind a 350,000-square-foot office to move into 27,000 square feet at Bell Works, he said.

This consolidation is helping to drive up vacancy rates. About 17.5% of U.S. office space wasn't leased or was available for sublease at the end of June, according to Cushman & Wakefield PLC, up from 13.2% five years ago.

Jeremy Witikko, global director of smart buildings at Cisco Systems Inc., said he has about three conversations a day with companies looking to reduce their office space. Cisco, which has embraced hybrid work, has said it plans to shrink its office space by about 30%.

Rather than sit at their desks all day, Cisco employees in the Manhattan office are expected to move around between lounges, meeting rooms and quiet rooms based on the type of work they do, said Cisco's smart-buildings leader for the Americas, Bob Cicero.

The goal is that a more homey, collaborative and modern office will give workers a reason to come in. "We fundamentally believe the office needs to earn the commute from our employees," Mr. Cicero said.

Mr. Sullens said his vision of the postpandemic office is similar to a university campus, where students rarely work in one place, but split their time between dorm room, library, classrooms and lecture halls.

CentralReach's move to the Bell Works building, a property that dates to the early 1960s but was redeveloped in the past decade, comes with plenty of modern amenities.

The 2-million-square-foot complex -- where the hit Apple TV+ series "Severance" was filmed -- includes shops, restaurants, a Montessori school, a plastic-surgery center, a hairdresser, indoor golf and an indoor basketball court." [1]

1. Offices Get Upgraded Amid Remote Shift --- Companies are still betting employees would benefit from regular office use
Putzier, Konrad. 
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 13 July 2022: B.6.