Air filters and outdoor spaces: Office costs rise

[SEATTLE] The cost of office maintenance dropped significantly in the pandemic when workers went remote, as companies saved money on services like cleaning and security, as well as perks like dry cleaning and endless pantry snacks.

But as employees begin to head back to the office, the cost of running the workplace is increasing.

By December, about 40 per cent of workers had returned at least part time, although the Omicron variant of the coronavirus has put a chill on return-to-office plans. And developers still expect that employees will be back on site in the long run, even if hybrid work becomes more common.

CP Group, which owns and manages 32 office buildings, mostly in the South-east and South-west, has bought US$1.2 billion of office space since May, a wager that staffs will return.

More robust air filtration and newly installed outdoor spaces are among the items that will add to developers' costs when more employees return. New cleaning practices may make those services more expensive, and landlords are offering new amenities to lure tenants back.

"Operating expenses were down a bit in 2020," said Kristin Mueller, chief operating officer for property management at JLL, a real estate services company that oversees more than 1,000 office buildings across the United States. "For 2022 properties budgets, we are anticipating modest overall increases."

The cost to run the office today remains lower than pre-pandemic levels but not as significantly as many managers expected, because each savings area has a factor that can complicate or offset it, Mueller said.

Having fewer employees on site translates to less daily cleaning and trash collection, for instance, but those reduced janitorial services are often countered by directives for deep disinfecting, as well as higher labour costs for maintenance. And spending on supplies like coffee filters, pens and paper towels may be down, but they have been replaced by purchases like hand sanitiser and masks.

Because the coronavirus is spread through airborne transmission, one of the most significant changes in building operation has been a focus on air quality. Many companies are scrutinising their ventilation, which could involve installing more robust air filters to screen out virus particles, for example, or replacing the building's air more frequently.

Water and electricity use may be lower than usual, but even with fewer people in the building, heating, ventilation and air conditioning systems costs have probably increased.

The Centers for Disease Control and Prevention lists ways buildings can improve ventilation, like by running HVAC systems at maximum for 2 hours before and after buildings are occupied.

Employers are paying attention to air quality as never before, said Nellie Brown, a health and safety specialist who provides training and technology assistance for New York state workplaces through Cornell University's School of Industrial and Labor Relations.

"If you don't spend money on upgrading your ventilation, you might be spending it on sick people," Brown said.

She added that these upgrades could have helped reduce the spread of the seasonal flu in years past had they been in place.

Upgrading HVAC systems can be expensive and add monthly costs. New equipment for a typical 100,000-square-foot office building in Chicago, for example, might cost up to US$100,000 to install, Mueller said, and can add 5-10 per cent to monthly bills. For offices in milder climates, just opening the windows can increase air quality, although many office windows do not open.

Building managers are creating more rooftop and patio spaces for workers. Maintaining those spaces will mean additional costs, like heat or cooling, but Angelo Bianco, CP Group's managing partner, said his company was adding outdoor lounge space "to every building we own".

Some new designs focus on flexible indoor-outdoor spaces, like an airy lobby coffee shop with indoor seating and garage-door type walls that can be opened to patio space.

Adding outdoor spaces was already a trend before the pandemic, but "now it is elevated in priority", said Greg Smith, CEO of Urban Visions, a Seattle developer. He has 3 projects set to open in the next few years, and each one offers significant outdoor venues.

"The era of stuffing people into offices like sardines is over," he said.

Before the pandemic, developers were already offering services like dry cleaning, shoe repair and grocery pickup. As employers compete for talent now, Smith said, creating an environment that has the right amenities is part of hiring and retention. These might include workout facilities, showers, health clinics, indoor and outdoor greenery, bicycle parking or lockers where packages can be delivered.

One of the pandemic's biggest challenges has been child care, which many workers have cited as a reason to work from home or quit jobs altogether. Recognising this struggle, Bianco said his properties were building more on-site child care facilities to accommodate parents.

"The question is, 'Why would employees want to come back, and what amenities do I need to provide?'" Smith said, adding that when he talks to the interested tenants, "everything is on the table."

NYTIMES