As businesses reopen and employees return to work, they’re entering a new world with “rules of engagement” rewritten by the dangerous coronavirus.
All types of workplaces will be reconfigured and personal interactions changed, at least until an effective vaccine is developed, which could be at least a year from now. Trade associations, state governments and consulting firms have been issuing guidelines to deal with the new reality. For example, national real estate company Cushman & Wakefield developed a reopening guide that includes a concept called “the 6-foot office,” designed to maintain employee separation in the workplace.
In recent years, traditional office designs have been replaced by open office concepts, with low or no barriers between workstations. But Matthew Stevenson, a partner at workplace consultants firm Mercer and leader of Mercer’s workforce strategy & analytics practice, sees a return to offices with walls, at least temporarily.
“Close proximity and shared work spaces don’t work so well when people are supposed to ‘social distance’ and be at least 6 feet away from peers, and avoid groups,” he said. Open offices “could be an infection nightmare. Without a deep disinfection day to day, the constant churn of employees in different work spaces creates an ideal environment for pathogens to circulate. By nature, the ‘group working’ concept favored by tech firms, and rapidly copied by professional service firms, is not viable until we have some sort of vaccine, so walls will have to go up again.”
To meet lower-density office guidelines, it’s likely some employers will need to assign more workers to work-at-home status for the long term, said David Serrano, a principal with Minneapolis-based RSP Architects. As companies reopen, employers can anticipate receiving new government-mandated plans and standards, akin to the OSHA standards designed to safeguard workers.
Developing company-specific plans will require active participation by both management and employees to create a safe environment, Serrano said.
“As employees feel safer and comfortable, hopefully their productivity will be enhanced,” he said.
Office layouts also will have to be rethought, Stevenson said.
“Will employees come to work if they have to work in an environment that can lead to infection or may be mandated as “unsafe” under social distancing guidelines?” he said. “Will employers move to a more “closed office” environment to avoid pathogens, or is the “open office” of the future really going to be a ‘remote’ office?”
Social distancing is more problematic for restaurants and bars, where business models depend on customer numbers. Placing tables farther apart reduces capacity and revenue.
Even prior to state or regional orders temporarily closing restaurants and bars, hospitality businesses had begun to go even further to implement heightened cleaning and sanitation protocols and increased social distancing practices, with many following best practices from the Centers for Disease Control and Prevention, the National Restaurant Association, the American Hotel and Lodging Association and the National Association of RV Parks and Campgrounds, industry officials said.
Liz Rammer, president and CEO of the trade group Hospitality Minnesota, said members have received reopening guidance from the National Restaurant Association. “Every business has a different model and design; everybody is going to have to figure out what kind of space they have to work with for staff and customers,” she said.
With normal business and revenue flows interrupted, commercial real estate landlords and tenants are forced to quickly rethink their leases and contracts, said attorney Mark Hamel, head of the real estate practice at Dorsey & Whitney in Minneapolis. In the end, the landlords and tenants who best handle the crisis will be those who collaborate and work together, as opposed to drawing a line in the sand and trying to use it to their advantage, he said.
“Landlords want to keep the rent spigot on. They don’t want any reduction in rent or the financial performance of an office building that is largely full of tenants,” Hamel said. “Landlords don’t want to be shortsighted and end up with an empty building.
“Likewise, tenants don’t want to take advantage of a bad situation by not paying rent when they have the ability to pay it,” he added. “Some tenants will get rent relief because they need it.”
To get rent relief, tenants might be required to disclose financial statements or apply for SBA loans or similar opportunities that might be available, he said. A landlord and tenant could negotiate an agreement that delays monthly rent payment and bundles it with other monthly rent, due later in the year.
“There is going to be a lot of negotiation about how to work those things out on a case-by-case basis,” said Hamel. For example, a landlord could ask a tenant to agree to a lease extension in return for some short-term rent relief.
“Whenever these unique times happen, people have to be creative and work together,” he said. “It’s going to be interesting, but we will get through it one way or another.”
As a relatively unprecedented event, the pandemic already has triggered a reevaluation of key documents, such as leases, Hamel said. Much of the focus is on force majeure provisions — a common clause in contracts that frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties happens. The coronavirus certainly fits that definition, Hamel said.
“For example, a force majeure has a laundry list of acts of God, government actions, labor disputes. . . . It will be easy to add pandemics,” said Hamel, who’s spent considerable time in recent weeks evaluating the force majeure clauses in leases to make sure his clients — both landlords and tenants — are adequately protected.
Retail tenants who have suffered major revenue losses will need to negotiate some form of relief with their landlords.
“Some tenants won’t have the ability to pay,” Hamel noted. “Landlords will want to work with those tenants, since it is not in landlords’ best interests to empty out the retail portions of office buildings.”
In the current pandemic situation, most office tenants won’t find anything in their leases that allows them to not pay rent, except for events such as fires or weather catastrophes that make building spaces unusable, Hamel said. Some might argue that a state mandate that prevents use of office buildings might be considered a takeover, which might relieve tenants from their rent obligation, he said.
“But there is a lot of case law suggesting that a government reaction to a public emergency such as a riot or pandemic is a permissible use of what the law calls ‘police power,’ and therefore not a taking,” he said.
Looking at the bigger picture, Serrano sees the virus crisis as an opportunity “to reexamine some really good thinking that has already been done and actively engage it,” citing his industry’s efforts to think globally and act in ecologically sound fashion.
“There are some really good programs that have happened, even beyond LEED (Leadership in Energy and Environmental Design) and the WELL building standard,” he said. “Some of the initiatives designers have been trying to advocate are now happening because we are being forced into it.”
For architects, “our primary objective is the health, safety and welfare of the population. That’s how our licenses read,” Serrano said. With workers being forced to stay home, “one of the things coming out of this is creating a constellation of different ways to work, instead of commuting to one location.”
One positive byproduct of that may be achieving the 20 percent reduction in greenhouse gases — due to traffic reductions — that has been set as a goal by public and private entities, Serrano noted.
He recounted a recent conversation with a colleague in RSP’s Phoenix office who said he could see mountains from his house he had never been able to see before.
“The atmosphere is already cleaning up. So, we are trying to look at things that have happened as positive opportunities,” Serrano said. “Winston Churchill said, ‘Never let a good crisis go to waste.’”
— Dan Emerson, BridgeTower Media Newswires