The new commercial office
Workers are heading back to the office, but not to the same world that existed before 2020. Office space is a different commodity now.
The 701, a coworking space in downtown Grand Forks, is the kind of place that you’d expect would be flattened by the pandemic. Its operating model brings people together, out into public – instead of working from home.
But Maggie Brockling, executive director of the group that manages the project, said it’s recovering well from a mid-pandemic slump. Office workers, it seems, don’t always want to work in an office. But they can’t seem to quit human connection, either. One guest, Brockling said, works remotely on quality assurance for a software company in Nevada.
“He comes into the coworking space every week to two weeks,” she said. “He does take time off and works at home, but it seems like he prospers or proliferates because he’s with other people, and he can talk to them.”
The 701, and all the perks it provides for would-be home office denizens – from social interaction to conferencing tech – captures the current moment in post-pandemic culture. Office workers are heading back, yes, but not to the same world that existed before 2020. Office space is a different commodity now.
Blue Weber, who heads Grand Forks’ downtown development association, points to one local company whose office has transformed into less of a 9-5 destination and more of a workplace hub, with workers coming and going as necessary.
“Their office space, sure they still have their cubbies and their independent little cubicles,” he said. “They’ve really approached it as ‘the office is now providing a collaborative space.’ When you need to work from home for a day, you can work from home.”
Upper Midwest real estate pros say that’s no surprise. Commercial demands have been scrambled by the pandemic, sent off in new directions that could drive upper Midwest construction and real estate for years to come. The effect is different for offices, for industrial and for retail and more, but it all can be traced back to what COVID has done to working and living and buying habits – all of which are now shaping the new economy.
Zach Frappier is director of realty for West Fargo-based Epic Companies, which handles leasing and development and more. He said local clients are often looking for smaller office spaces – commensurate with fewer demands on a central office.
“I was working with a medical group, and they can do a lot of their stuff remotely … So there’ll be virtual appointments one day a week, and then they’ll come to the office three days a week,” he said. “So the (area) requirements have dropped quite a bit. They were in the maybe 2,500 square-foot spot, and now they’re working in a 1,500 square-foot spot.”
Mark Fabel, executive vice president of development for St. Paul-based McGough, said that in the case of office space, the market doesn’t have stiff demand for new office buildings so much as it has a remodeled approach to the office – emphasizing amenities that make employees want to be part of a central location. The fears that corporations would start dumping office space at high rates, he said, haven’t come true.
But where the market is really booming, Fabel said, is places like domestic manufacturing and distribution. The pandemic upended global supply chains and demonstrated a vast appetite for goods sold online. Now investors – crowded by competition in those bigger cities – are catching up, and putting capital in buildings ready to accommodate growing supply chains in smaller cities, too, where he points out there’s often less leasable warehouse space.
What the future holds is never easy to predict. But Fabel sees strong demand for distribution and domestic manufacturing networks for years to come. One of the things that will keep driving it, he said, is a growing realization that big projects in big cities can also chase talent elsewhere, too.
“Projects are being pushed further and further out” from big cities, Fabel said. “And they’re leapfrogging to smaller regional cities … because access to labor is stronger.”