Need for offices: North Bay businesses weigh productivity of telecommuting against cost of distancing

While Redwood Credit Union has continued to operate its branches during the coronavirus pandemic, it has brought back only 28% of the roughly 385 employees who work at the Santa Rosa headquarters since the county shelter-at-home orders began in mid-March to slow the outbreak.

The financial institution has found out some of what Google, Facebook, Twitter, Amazon and other large companies about remote work during the pandemic and how it is shaping up to be the way such knowledge-based workforces operate in the future.

While Redwood Credit Union has continued to operate its branches during the coronavirus pandemic, it has brought back only 28% of the roughly 385 employees who work at the Santa Rosa headquarters.

The financial institution has found out some of what Google, Facebook, Twitter, Amazon and other large companies about remote work during the pandemic and how it is shaping up to be the way such knowledge-based workforces operate in the future.

About 15% of the credit union’s largely call center employees continued to work from the Cleveland Avenue main office because they didn’t have a robust enough internet connection or they didn’t have a right home work environment, according to Tony Hildeshiem, chief administrative officer. The company provided secure laptops to the remote workers but put requirements on the physical space, that it be quiet and private enough for sensitive customer conversations.

On June 15 another 13% of the central office workers — around 50 people — returned to the headquarters. Because less foot traffic at the branches, allowed to remain open to the public essential business operations during the county health orders, Redwood assigned some of those workers to reduce the wait time for customer support calls.

“Some found working from home to be not as fun and as exciting as they thought it would be,” Hildesheim said, noting that some felt working from home to be more stressful than from the office. (See “Research on remote work” below.)

But there’s no immediate hurry to bring back the rest of Redwood’s headquarters workforce, he said. First, collaboration and call center tech in place before the shelter order allowed for productivity to be sustained. As news of the pandemic grew in late February, Redwood quickly started integrating collaboration tools such as Microsoft Teams and videoconferencing software.

Second, the institution’s management are concerned about a conjunction of public safety power shut-offs this fall, as happened across wide areas during wildfire season last year, at the same time as the feared second wave of the virus. If left in the dark, remote workers could be brought back in to work from the headquarters’ backup power system, but bringing them back during a retightening of the shelter order on nonessential office functions would be problematic, Hildesheim said.

Even as Redwood employees are starting to return to headquarters, the company has closed conference rooms and enforced virtual meetings even for in-office communications. And that’s something that likely will endure in company culture beyond the pandemic, Hilesheim said.

“We have a set of standards to live by, and one is not to visit people in their cubes and don’t go to meet in their offices. We plan to keep that practice going, so the need for meeting rooms will be reduced.”

One idea that’s being considered is to use the office meeting rooms, currently closed, for private videoconferences.

“This is an opportunity to rethink office space as blended virtual and in-person space,” Hildesheim said.

Even if Redwood is being cautious with hiring to support its member-customer growth, the institution is still moving forward with its Napa call center project, intended to help draw talent from Napa and Solano counties, Hildesheim said. Designed now for 500 employees, permits were just obtained to start pouring the foundation of the facility, and it is set to open in mid-2022.

Marin cloud software maker continues working remotely

Autodesk in Marin County spent the last few years helping customers in construction, manufacturing and media design install software on demand “in the cloud” and freeing worker to work remotely.

Then the pandemic forced hundreds of its own employees in its San Rafael headquarters and satellite offices to do the same.

Three months later, the firm is now looking at bring those workers back to their desks amid hundreds of thousands of square feet of office space.

“As we prepare to reopen Autodesk offices, our top priority continues to be the safety and well-being of our employees,” said Stacy Doyle, director of brand communications. “Because no two offices are alike, each Autodesk location will be individually evaluated for reopening. When an office reopens, we will start with essential employees and evaluate how things are going over time. We will also take additional safety precautions such as disinfecting workspaces, limiting visitors and adopting physical distancing practices.”

Flex space in Santa Rosa

Cornerstone Properties operates several hundred thousand square feet of industrial, office and retail space in Sonoma County. That includes the 427 Mendocino Ave. building in downtown Santa Rosa that’s home to The Press Democrat and Business Journal editorial offices plus Cornerstone’s coLab coworking center on the ground floor. While not the publication staffs continue to work largely remotely, there is demand for the private offices in the 15,000-square-foot cowork center, according to Pauline Block, head of marketing and development for Cornerstone.

Some of this demand is for “flex space” for companies with remote workers to have a physical meeting place.

“People are going to want a different workspace, even moving forward,” Block said. “People will feel more comfortable having more space around them, not being so tight next to other people.”

Some of the sanitation and distancing protocols may remain in place after the COVID-19 crisis, as they could help during flu season, Block said.

“So it's not like after this, it just all ends. And so, you know, some of it may get a little bit more lax again, but I think that some of these protocols a lot of businesses will end up saying they just want to make sure that their employees feel safe and like they're in a healthy workspace,” she said. “It could probably go into the whole wellness trend that's been happening for a few years now. People doing yoga in offices and having health bars in some of the higher end offices. Those trends are going to stay. This might turn into one of those things that morphs into just a way that people work.”

Napa office market slows

Before COVID-19, Napa’s office market had a sizable inventory of larger spaces that were available for lease or sublease, but smaller spaces that suited typical tenants in the market — 2,500–3,000 square feet — were being snapped up relatively quickly, according to Joe Fischer with Strong & Hayden Commercial Real Estate.

Two of the more sizable deals but typical of the market activity before the pandemic were roughly 5,000 leases in the downtown area by an accounting firm relocating from St. Helena and by a title company.

When the shelter-at-home orders came in mid-March, small office deals in the range of 1,500–3,000 square feet were completed, but companies looking for larger spaces in the valley retrenched.

And the interest in deal-making has been limited in the few weeks since as Napa County has been allowing more sectors of the economy to reopen, Fischer said.

“Some people have to do something because they're facing a lease renewal in a period, and some people don't. Realistically, people are still just trying to figure it out,” Fischer said. “The office inquiries that we get are fairly limited based on what we saw before.”

Reevaluating space needs

There are two key things business owners he’s talked to are trying to figure out.

First, what their new office should look like in terms of configuration.

Second, how much do they really need?

Some are thinking about the possibility with having their workers remotely distributed, while others say they need to get the employees back together to really get the productivity back.

Working out the break point for productivity versus real estate outlay is an attractive target for cost analysis, said Fischer, who has also been a business consultant for local development and property-repositioning projects. The key for the current metric is whether a business owner can avoid the hard cost of office space and everything that goes with it while still managing the team efficiently in a distributed fashion, Fischer said.

The largest office deal in Napa Valley in the past year came before the virus outbreak, but it could be part of the future of local office space in the future.

Spaces, the cowork centers division of temp-space global giant Regus, has secured 18,000 square feet on two floors of the former McCaulou's department store building at 1300 First St., now part of the First Street Napa redevelopment project. It would be Napa’s largest cowork facility and join several existing Regus locations in the North Bay.

Todd Zapolski, whose company is partly behind the First Street Napa project, has been eyeing the 10,000 square feet of available office space in the Gordon Building, located next to the Archer Napa hotel, for companies that want to relocate out of dense urban areas where COVID-19 infection can be a bigger concern.

Research on remote work

The shelter-at-home orders have provided a global experiment for whether remote work that has historically been viewed as employee perk can be employed at scale across an organization and make it function at least as well as when the workforce is together — and whether workers actually like it.

Research has been coming down on various sides of that equation.

The research arm of global architecture firm Gensler found that only 12% of U.S. workers surveyed wanted to do it full time, while 44% were up for doing so one to four days a week, and an equal proportion didn’t want to at all.

Top reasons for wanting to go back to the office involved collaboration and community with coworkers. The researchers from mid-April through early May polled over 2,300 full-time U.S. workers who were working remotely for companies with more than 100 employees.

Meanwhile, commercial real estate services company Cushman & Wakefield recently found in its Experience per Square Foot analysis of work from home that 75% of the 40,000 workers surveyed reported being able to focus on tasks better while remote, and 73% considered flexible work environments to be an important consideration for the return to the office.

“While working from home, employees continue to report the ability to focus when they need to be productive on individual tasks,” the report said.

Both reports found similar challenges with remote workforces diverged by generation. Gensler found that the older the worker, the less the person was distracted in the home office, with half of Gen Z and millennials finding it harder to concentrate, compared with 41% of Gen X and one-third of boomers.

Meanwhile, Cushman & Wakefield found that 64% of the respondents encountered challenges with remote work, ranging from 70% for Gen Z down to 55% for boomers. A big problem overall was internet speed to handle all the videoconferences and cloud-based applications, and particular generational issues were adequate workspace for Gen Z and caregiver requirements for millennials and Gen X.

Jeff Quackenbush (jquackenbush@busjrnl.com, 707-521-4256) covers wine, construction and real estate.

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