Our presenter and host of this session participated in last year’s Workplace 2.0 Summit and he gave such a great keynote presentation and it was so well received that we had to have him back this year.
So Josh Cushner is a consulting practice lead at Arup, a world-class advisory design planning, architecture and engineering firm. And Josh and the Arup team always comment problems from multiple vantage points and today is no different. So during what’s so great about the office, we’ll hear from a panel of experts covering the occupier, the owner operator, professional services and urban development angles. So with that, I’ll turn it over to Josh and his guests.
Thank you very much, Bart. Thank you for the introduction. We have an awesome panel. I’m going to give some brief introductions so we can really just jump in and use the time to have a great dialogue between some really forward-thinking executives at some forward-thinking firms that can help answer the question for us, what is so great about the office as we move forward into this next phase.
So we’re going to talk about hybrid work. What’s in, what’s out, how we’re going to manage this change. First, I want to introduce Jenell Moffett. She’s the director of research and analysis at the Downtown Austin Alliance. We have Crystal Fisher. Crystal is the co-founder of Ease Hospitality and she’s the managing director of the commercial portfolio for Fisher Brothers. She’s based in New York City. We have Martin Byrne. Martin is the senior director of real estate technology for Salesforce. Martin is based in the Bay Area with me. And we have Paul Darrah. Paul is the director of real estate in New York City for Google. So amazing panel. Thank you all for joining. I’m going to jump in.
Hybrid works the topic when prior to the pandemic, the expectation was in the downtown business district you could have a business model Jenell that was based on people showing up Monday to Friday because it’s Monday to Friday. Now you have a business model based on people showing up when you can justify the benefit to them or when someone tells them they need to come.
And that’s a bit of what we’ll talk about. So you’re steeped in some data, I think, from this entire time period if you’re really interested to know what type of data and trends you’re looking at. And as you’re looking at those things what would Downtown Austin need to do more of and what types of things that you were focused on that maybe the data’s telling you, you don’t need to be doing so much anymore. And let’s just start there.
Yeah. Thank you for inviting me to this panel, Josh. Those are some really interesting questions. And so I will just begin by talking about the impacts that we’ve seen over the last year. As you know the central business districts are created around this 9:00 to 5:00 this regular sort of cadence of workers and visitors and residents sort of using this hub of activity and the pandemic, of course, made everything come to a halt.
And what uniquely we found out is that downtown in specific has been disproportionately impacted. So when you look at cities, the downtown urban center had deeper declines in activity than other parts of the city. Our data tells us that about 60% of our downtown workforce or the occupations are remote compatible. And at first it’s like, well, great.
They have the opportunity for work from home, but then on the flip side of that, that show that roughly 60% or more of our downtown employees work from home remotely for the whole year and some. And so that whole work from home experiments was extended. It really changed and shifted the way people thought about work. So there was a lot of conversations around the workspace, contracts, what do we do with these areas and these buildings.
On top of that, pedestrian activity on our main streets and downtown declined by as much as 80%. So no one’s walking on the streets and there’s not a bad lunchtime crowd. There’s not the regular transactions between businesses, meetings are all virtual, people are still at home. And so this has really disrupted how downtown works and functions even looking closer into the office market. Let me look at some stats here.
Our occupancy is still stable. So our occupancy rates haven’t dropped much. The market rates are still where they were pre-pandemic levels, but our leasing activity has slowed significantly. And so while there were major… while before the pandemic downtown’s office market was really tight. If you needed a space, you had to build the building with it and our market could support that.
And so anyone who’s tracking downtown real estate, Austin just is on the top of all of those lists. And so we never really had a challenge in that area. On top of that, people are moving into the area, migration trends. Austin is popular. And so the market is still strong enough where there’s a lot of momentum pass momentum still putting a lot of pressure to lease up those spaces and make sure that the office tenants are there.
Unfortunately, the data is still not showing that tenants are there. So we’ve been tracking physical occupancy within those buildings, not necessarily the occupancy rate and it dropped as low as 85% in April of last year and we are now up to roughly 70%. And so it’s grown some, but it’s still well below pre-pandemic levels. What we’re seeing Austin citywide is that 50% of the workforce is in their offices on a regular active basis.
And so some of the implications that you think about when you’re talking about a downtown core or central business district, or anything of that nature, you think about the other businesses that are impacted by not having people, just the sheer need to have pedestrian activity and people to walk the streets and sort of visit those businesses. And so we felt those pains as well, storefront businesses about 20% or so either closed or are still not operating.
Food places that cater to the lunchtime crowd, a large significant portion of those are still struggling to sort of bring people back. And so we as a Downtown Austin Alliance, which we are public improvement district, we are working hard to sort of launch a marketing campaign to bring people back, to talk about the value and the benefits of having these concentrated sort of services and activity.
We are working with our local visitor and tourism bureau to shout out the word that you’re missing out if you’re at home. You’re missing out if you’re not back in your office space where there are all these great parks and great public spaces and all of these things that you just can’t get from a screen. And so I’m happy to be part of the conversation. I have plenty more data, but I think we could just talk about what we’re seeing and what we’re hearing. And so thank you.
That’s a great place to start. Thank you. Well, we’ll kind of work on the zoom in exercise. So that’s what’s happening at the downtown level and that’s some great insight and I don’t think it’s different. If anything, Austin is one of those cities that does, like you say, have the demand going for pre-pandemic. I want to move to Crystal to kind of zoom in from the city to the building level.
And I assume what Jenell had said resonated with you some degree, this idea of maybe low vacancy, but also low occupancy. So you have a wonderful portfolio of buildings and at a time when everyone is rethinking what hybrid actually means and your tenants are rethinking their footprint most likely, or some of them are.
Similar question, it sounds like you also have thought innovatively about how to deal with this situation that you’re in the opportunity it presents. Maybe you could talk a little bit about what you’re seeing, some of your reaction to that and what it has pushed you to focus more on. And maybe some things that used to be important that are kind of in the rear view now.
Thank you so much Josh and thank you Jenell. That’s a lot of statistics and a lot of information. And I find it really interesting how different each metropolis can be. So we’re facing sort of the converse moment here where our commercial portfolio and across the city has held true somewhere through this moment at around 10 to 15% of people coming in.
And so I think that it’s fascinating to hear 40% and that’s something we’re hoping to get to by September. And by all communication and by all efforts of all creative thinking, I think we will get there. I think that the first question really becomes how have we personally… I’ll go micro, macro, right? So personally, we were in the process of creating a hospitality division when the pandemic happened.
When it started March of last year and we all picked up and walked out two days later except for me and three other people in operations who’ve been tethered to our desk through the entire thing. We thought of it as hospitality as an extension of commercial real estate, which was evolving already. Our demographic was evolving. People always evolve.
So even now as I will say things to you, and two days from now we’ll be continuing to evolve, to adapt, to be better at customer service, which is ultimately, I hope, what is the core of all of our commercial assets and residential. And so our hospitality division in the beginning was an extension of your workplace to make your day in the office feel like it had a reprieve and feel like you had a different place other than your cubicle or office to function, regroup and recalibrate.
Today, let’s fast forward, it’s no longer a division. It’s actually a company. It’s no longer serving a microcosm of people who need to have a place to eat lunch, but truly blending the gap between home and work. And so we’re seeing something in our statistics around 55 to 56% of people are not prepared to return to the office and yet on a regular basis.
So let’s not take away the fact that they’re coming back for meetings, collaboration, creativity, those are all really important to our tenant base. But there’s this real need to service the blend between physical and digital and between home and work where it never happened before on this level. So what we did is we created Ease Hospitality, which is a digital ecosystem.
It’s technology first. It’s no longer physical space first. It’s technology first. And it blends the gap by being able to provide everything that’s physically provided in a digital way. So I’m going to give a very basic example because I think the second part of this question is really about what’s most important, most important is health and wellness.
We all need to feel safe when we come back or if we’re entertaining coming back and that dips into transportation. It dips into our building. Our portfolio became well certified through this. What does that mean? We can talk about it if we want to, but the bridge here happens in connectivity.
So we’re a curated Ease Hospitality. Our function, our company turned into a curated ecosystem of an entire lifestyle solution to make working from home or working from work a better experience. And I hope that gets to the beginning of the question.
Yeah. That’s awesome. That’s exactly the type of innovation and thinking that we’re all trying to figure out here. The word hybrid is just expanding and it means so many things. It means physical hybrid. It means temporal hybrid. It means digital hybrid. So that’s amazing. Well, we’ll get back to that subject I think Crystal. And I’d be interested in knowing a little bit more about that blend.
And, I guess, let me take it to Martin next. Martin, Salesforce is one of the original cloud service providers. So you were in the cloud before the rest of us. Your logo’s a cloud. And in addition to being sort of a very digitally focused company in cloud, you also spent a lot of time and focus making your physical places where your employees wanted to be.
And I don’t know who plays 1A and 1B between yourself and Google and the number one place to work in America, but I’m sure you guys are up there on the list. And part of that is bringing, as Crystal said, some of that feeling of home into work. And that was something that you guys were ahead of the curve on.
So talk to us a little bit about Salesforce was quick out of the gate to help people work from home, I think, and in addition to how you think about servicing your customers you have all your employees that are also living in a similar situation. So where does Salesforce in your thinking on the hybrid workplace right now?
Sure. Well, first of all, Josh, let me thank you for having me on the panel. It’s a pleasure to be here. It’s great to meet all of these experts. Salesforce, when we started our real estate transformation about five or so years ago, we were really focused on hospitality first and the workplace experience. And we’ve kind of lived that for a number of years now.
And our offices are designed really to be almost residential like. We have a lot of very amazing incredible design. Our Salesforce design is second to none and our spaces are designed to be welcoming, to encourage people to come into the office. And we’ve been building that and rolling that out across the globe for the last five or so years.
We’ve been really focused on central business districts and named Salesforce towers in those districts. And that’s really not changing. We’re still committed to that and to that theory or that strategy. What’s changing is the way that we work. And we’re really transforming our company to be digital first. We’re embracing what we’re calling success from anywhere.
And that means our employees are able to work from wherever it makes sense for them. Whether that’s from home, from the coffee shop, from the office, according to what they’re planning to do and what their goals and outcomes are. And we’re really encouraging employees to think about when they are coming into the office to be more intentional about it and be more planful, right?
So we’re thinking about the offices now really as another doubling down on that kind of a workplace experience in hospitality angle. With the workplace for us it’s going to be a place for people to come together, to congregate, to celebrate, to collaborate, to connect with customers. So that’s kind of our guiding light, if you like, as we go through this, this transformation.
It’s no secret that 70% of our employees have told us that they only want to come back into the offices once or twice a week. Working from home was working for them and so we’re going to support that. We do have a certain percentage of employees for whom working from home does not work and we’re welcoming them back in our offices. We actually opened our offices in San Francisco a couple of weeks ago.
Just yesterday we reopened our New York Tower for employees to come back in. Those employees that want to come back into the office are more than welcome to come back to the office. And we’re making the spaces as welcoming as possible. There was a huge party in New York yesterday with a DJ and then swag handed out for those that were coming back into the office.
We’re really embracing people coming back to the office. But, again, it’s what works for them and what they’re coming to the office to do. We want to make sure employees have the choice to be successful.
That’s awesome. Thanks, Martin. So that idea of employee choice maybe is a good segue to Paul. Paul, you oversee a very large portfolio in New York City of Google spaces and you’re overseeing that growth. And I think a similar question to you and I believe you might be in a slightly different position whereas Martin is working for Salesforce who’s mostly a tenant around the world.
You I think have a little bit of both of owning your buildings and being tenancy in some of your buildings. So when you look at hybrid work, I think, what’s Google focusing on the most with your building stock in terms of what you’re trying to do? Is it around hospitality, which seems to be the subjects we’ve discussed here?
Is it still around focused work? Is it around group work? What are you looking to do more of and what aspects may be the desk space and things like that? What’s Google’s philosophy on the makeup of space going forward in hybrid work?
Again, thank you for having me and it’s exciting to have this conversation. So I think it’s interesting to note, Crystal, I think is the only one who is actually in an office of the panel. And I’m very jealous of that because I think I’m also responsible in addition to New York portfolio for helping to lead our return to office, which we’re really talking about a return to community, right?
This is less about the asset and more about the ability for people to convene and enable something that you can’t get sitting in your living room or in some people’s bedrooms where the level of connectivity across the organization. And I think for us we’ve always looked at hospitality and we’ve always created a very amenity-rich environment because it is part of what brings people together.
The gyms, the dining and all of those things just foster additional layers of community building not just within your organization, but across the organization. So for us, I think, the return to office is really important. I don’t know that anyone has a crystal ball of what the hybrid work really means in the next two and three years.
I think one of the things we’re looking at which is historically we’ve invested for 15-year leases significant capital improvements in the built environment. And I think what we’re likely going to see is that our workplace will become more like retail and hospitality where we will be refreshing whether it’s seasonal for the new line of clothing that comes out or as hospitality evolves and supports the needs and the kind of requirements of the worker.
I think that’s really what we’re going to be looking at, which is how do we continue to evolve the place so that it provides the right level of function and support for people when they do come in the office. Truthfully, the desk is much less relevant potentially in the new environment, but we have people who are coming in likely three of the five days a week.
We have a lot of people asking, “Can I come in for five days if I want to?” So I think there is a bit of people want to get back. They want a distinct environment that is not home where they can actually go to work. If I had a crystal ball, I think what we’re framing is the year of experimentation, which is as we bring people back the next several months are going to be about bringing people back safely.
We’re going to start to understand what does it mean for people to be working three days in the office two days away. How do we create the right level of amenities that support people that create a FOMO? There’s almost a fear of missing out of not being in the office.
And given we now have people that can work remotely and potentially roles that are going to be remote, how do we ensure equitable participation for those people that are not in the office with the people that are in the office? So I think we have some really exciting times ahead of us to figure out what does the new workplace environment look like.
And it certainly the desk isn’t going away, but it’s what are all the spaces that we’re going to create that enable the collaboration that needs to happen? Because that’s why people are coming back to the office is to collaborate and be with other people, and then they still need to get work done. So this new hybrid model is going to create a lot of opportunity for us to rethink the physical space and the way in which we support our employees.
Thanks, Paul. But you broke the seal on the word experimentation, right? And I think that’s where a lot of this conversation actually starts is when we all admit we don’t have the answer. We’re learning as we go. And let’s take that as our next around the horn here. And we’ll start with Jenell again.
You’d kind of alluded to your old metrics not really being the right metrics. I’m curious if you can talk a little bit about what you think those metrics maybe you are starting to develop or you’re starting to think about that’s going to tell us more and get us more insight into what we’re going to learn over the next six to 12 months.
Yeah. I would like to piggyback off of something Paul said around making this inclusive work environment or having this shared experience where both remote and in-person people have some sort of similar experience. And I think that’s going to continue to be a challenge, but through innovation you work through those things.
I think another thing to think about is you think about building by building or street by street, block by block there’s a whole number of datasets out there that will tell you more about your tenants, more about the demographics and really being mindful of added needs for diversity, added needs for ways to improve the public space around those areas.
And so I think taking a hyper local focus on some of those aspects because we know that it’s all not one experience, right? I mean, when you go to work, it’s not you park and go to your building or you ride the train and go to your building. There’s a whole host of experiences that you have along the way.
And so really it’s forcing us in the urban place management or in the commercial real estate industry to rethink about all those experiences. It’s not one. It’s not a simple concept. Now you have to be more responsive to a number of different types of people and different types of ways of doing things. And so I think it’s exciting because it’s forcing us to put people first again.
Yeah. And maybe the FOMO and ethic Martin described the before. He’s throwing bashes already. There’s aspects where the cities, the buildings, the tenants kind of are all working on this same effort. And it’d be interesting to see where those interconnect.
And, I guess, Crystal, maybe I’m curious what type of dialogue you are having with your tenants about this changes that you’re making about trying to do a lot of the things that I think Martin and Paul mentioned around about your idea of bringing together the parts that used to be divided in life, where you had a weekend life and a weekday life. And so talk a little bit about those conversations if you were to sort of their interest in what you’re doing and how that’s changing the conversation for you.
Yes. I appreciate it. I think that the nail was hit right on the head with returning to community, right? I mean, we’re coming out of it a year plus of isolation for many and it’s understanding how to return to community and what is valuable about the return to community.
And I think that for us what we’re hearing most, seeing most, facing most and doing most of… And Josh, the reason you and I are connected is actually very much the point. It’s safety, right? So first everyone has a lot. It’s equally psychological as it is practical. And I think that the idea is that from the flow studies we did when people left on how to return them safely, now people are educated.
They’ve had the time to understand what they expect of a building, what they expect of a transportation commute, what they expect of coming in, what does it mean to get here and what are they taking away from it? So very pointed I mentioned well certification across our portfolio. What’s under that is the understanding of indoor air quality of how to breathe better.
And so Jenell made the point that people want to have more. And I think we had a great opportunity through this crisis to make more, to do more, to offer more, to be healthier. So it’s everything from bike racks that are expanded across every part of our portfolio all the way through that ease.
And it really inside of that ease it’s offering an in-person enhanced biophilic design space that allows you to breathe better, think better, be better and connects through this digital landscape in a way that offers a healthier choice, right? All of our virtual fitness classes are in-person and everything is done through an easy way. But it is about creating a community that not only adds value, but feels safe when it adds value.
Yeah. That’s a really interesting and I think a theme for all of us to think about is there’s this background of health, safety and wellness that’s not going to go away and our heightened awareness of it. I know Martin your team at Salesforce has been looking at how to enable your workplaces for a long time.
Technologically that’s basically your MO for your position. So maybe you could talk a little bit about your view on upping the game for health and safety and wellness beyond maybe where it was and how much of it is really related to the pandemic and how much of it is just good design and good approaches that you’re adopting.
Yeah. Sure, Josh. So obviously, the health and safety overlays customers or guests as first and foremost is top of mind for us as we reopened our offices. I did say that we’re reopening. We’ve really opened now. I think it’s about 27 offices around the world, but we’re reopening very cautiously, very slowly following all the local government guidelines.
And we have then our own level of health and safety on top of local government guidelines there, just because local government agency says it’s safe to reopen now, we add additional layer of our own due diligence on top of that. So for example, in San Francisco where we’ve reopened a couple of weeks ago, we’re reopening without voluntary vaccinated cohorts. So we’ve offered 100, 200 spots now actually available to folks who can prove that they’re vaccinated that want to come back into the office.
So that those that are in the office with them can have peace of mind and assurance that everybody in the office is vaccinated. We’re still adhering to local San Francisco guidance regarding mask wearing and social distancing in the workplace, and using our own work.com products to track health attestations that people coming into the office using a work.com for shift scheduling so we can manage social distancing in elevators, manage traffic flow back into the offices.
And we’re continually exploring how else we can improve the safety of the workplace. For example, we recently worked with our landlords to do a full HVAC analysis and upgrade all of the air filtration systems in the spaces that we’re occupying. It’s a continual journey. I think we’re always learning. We’re learning. We learned when we reopened San Francisco. We had to adjust some things.
We have some learnings out of New York already from yesterday. I mean, it’s a journey. And just in the spirit of experimentation, we’re experimenting with all kinds of different things, not just with technology. We’re experimenting with different workplace policies, trying to think about how do we help teams understand when they should be planning to come into an office again, back to that intentionality and purposefulness.
So when experimenting with different teaming agreements and ways that teams will work together when coming into the office, experimenting with different design and different layouts in the office. Like Paul mentioned, the desk is not the primary thing within an office anymore. And we’re seeing that ourselves. The aesthetics, a certain component of the workforce, that’s coming into the office to find a desk to sit down and do heads down focused work.
But we find that the majority of people that are coming in are coming in to kind of to connect, to collaborate, to socialize, honestly, to meet with friends they haven’t seen in a long time in person. And so we’re thinking about different experiments with our furniture layouts and with our spaces to enable those different ways of working that we’re seeing in the office today.
Then, of course, in my own my role, I’m focused on experimented with different technology, whether it’s occupancy sensors, and people counters, and energy systems to truly understand the flow of people within the workplace and how different spaces are being utilized. So it’s very much a year of learning, a couple of years of learning, I would say. In fact, I don’t think the learning is ever going to stop.
That’s right. And if there was a lot going on before, there’s even more now, and I imagine the demand to get data from your buildings and use it is just exponentially increasing.
Paul, you had mentioned the equity component that while we’re all trying to think of the benefits of coming to the office and amplifying those benefits, we also want to respect that you will have employees that that will not be in the office on particular days or maybe any day, and you want to give them a similar equitable career. So can you talk a little bit about how Google is thinking about how you’re actually going to achieve that, given that that hasn’t really been a mode or a model that has been a focus up till now for many of us?
Sure, absolutely. And I just want to anchor to one thing that Martin said, which I do think prior to COVID, not everyone actually really understood how they spent their eight-hour day when they were in the office, right? And if you really looked at how much time was spent at your desk and heads down focused work versus how much time was spent elsewhere in the office, no one really calibrated what, where, and how they spent their day relative to surveys and a lot of what I would say is some of our UX studies as we look to ensure we’re building the right type of workplace.
And I think in the go forward, technology is certainly going to be a really key enabler. We’re partnering really closely with our technology organization. I’m assuming most people have seen the New York Times article around some of the work that’s being done in our RND Group, which is really thinking out in terms of three to five years out, what does the workplace look like?
And so we’re looking to launch new technologies. We’re looking to actually understand how are people using technologies differently now than they might have previously. So I think, again, we have a lot to learn. There is both understanding intent and then understanding actually performance is going to be a really important aspect of that product life cycle I talked about before, which is, do we need a different set of tools to enable what is a more distributed workplace?
And recognizing most teams probably were distributed well beyond a single office. If you look at our 120,000 employees that are global, they’re all working cross-functionally across teams. And so how do we balance the technology that continues to enable that?
And how do we, to Martin’s point, create spaces that enabled that and the technology that we’re using to compliment to provide those people who are not in an office, the ability to work, and participate in an equal way, because that’s the new factor, right? You’ve dialed in from home. How do we make sure that you were participating as if you were in the office? So, again, lots to learn very exciting time.
Yeah. How much change is required to actually get to that point, I think is what we’re trying to wrap our heads around.
That’s right. And I think it’s going to be really iterative, right? We’re going to bring people back in September with some new technologies that are going to begin to really enable us to understand what works and what doesn’t. We’re going to look to fail forward and take advantage of a lot of lessons learned to continue to evolve.
So you left us off with experimentation on the last round, I think, with to make learning this round here. And, Jenell, we’ve heard from everyone on the panel really driving the theme of bringing homework, hospitality, basically making life the thing that happens during Monday to Friday, and somehow you infuse both work and the things, as someone mentioned to me, “I used to manage my life around work and now I’m trying to manage my work around life.”
And that seems to be a theme that penetrates a lot of this. So as you hear this conversation and you have your own role in the downtown Austin Alliance, what do you think downtime districts can be doing with landlords and major tenants like Salesforce and Google to really help amplify this new approach to giving people more than just a strict work experience?
Yeah. I think the optimal word there is amplify. I think every building, every property owner, every real estate professional, we’re all trying to do the same thing, right? We’re trying to maintain some stability within the workforce. We’re trying to make sure the economy is still strong. We’re trying to be equitable and inclusive. We’re trying to do all of these things.
And so I think the opportunity there, especially within these downtown hubs, is to work together to amplify that message, to communicate broadly, what are those enhancements? What are the things that are being done? To continue to do research, continue to conduct surveys and figure out what makes people comfortable or what works better, or are there ways for people to explore challenges more quickly, and bring employees into the conversation to sort of re craft what they find to be useful for their lives? I mean, because it was a big shift to go from creating a life around your work, and now you have this work around your life. And what does that look like? And everyone is having those conversations on a regular basis. I think a big opportunity is when the fall comes and kids go back to school, and that’s a major shift and a major sort of milestone for us all that, if we can continue to have these conversations and promote what every individual entity is doing to encourage people to work safely and to be innovative in their practices, does the meeting have to be in this conference room?
Could it be in this park? Or could it be in this other location? How could we ease the way in where workers, and employees, and just regular patrons of our downtowns and of our cities get excited and don’t feel as though they have to be sort of boxed into this one space. And so I think ultimately, we’re thinking about flexibility here and how do you create a city that is flexible and responsive to all of these needs that we didn’t know we had and all of these flexibilities that we didn’t know we had.
And so I think it’s just an interesting time to look at that. I mean, for downtown, we have a roadmap to recovery, and we use what we’ve learned from the pandemic to really focus on those areas of weakness, those areas that we really need to focus on. Some parts need more help than others.
And so being more responsive to that, not assuming that we could just push through and everyone will just comply. I think those concepts are a thing of the past. I think right now, you have to work with your talent pool, you have to work with your employees, you have to work with your community to come out with shared solutions.
Yeah. I love the idea of using our shared downtown spaces more as our office space. I know a bunch of people had meetings with their teams in parks. I think we just missed a whiteboard, was all we really needed in the middle of the park. And I think your note about what changes when all the kids go back to school, we just had everyone with kids on the line crossing their fingers saying, “Please, please let it happen.”
Crystal, I’m curious in this idea of what we’re going to learn going forward. What are you looking to learn from this next experience, say the next six months or so, maybe even just the summer kind of when that post labor day thing happens when hopefully the occupancy does start to go up in addition to the vacancy going down. What types of learnings are going to help you really kind of make the next move in the direction you’re already pushing your buildings in your portfolio?
I appreciate the question, because I think that we should always continue to learn and persevere, no matter if we’re facing a particularly difficult moment in time or not right? And so I’m fourth-generation in an 109-year old business, and so adaptability is critical. I think that from my experience where I sit, I have seen that in New York in particular, but I do believe most tenants or people on the hunt for a new space have very short-term memory when it comes to these things.
We saw post-crisis before in New York City that there would be a moment where people would never go to the top of a building, for example, and then very quickly thereafter in a measurable window, the top floor is releasing. And so there’s a part of me that prays that this is one of those very quick returns to normalcy to what we knew before. What I do think we’re going to see happen is, and it was creeping in, real estate was a little slow to get there with technology.
There was an acceleration of the use of technology. What I’m most excited about is how to learn how to use that and enhance it in our everyday lives. And it’s everything from understanding the information we have been collecting all the way through putting it in people’s hands in a usable way. We created a workplace app that was started before this moment in time, but definitely didn’t have the features it has now, everything from being able to book and reserve a massage all the way through facilitating meetings, other than in Zoom.
Sometimes people just want to call people, but they want to make it easy in doing so through works solutions. And vertical catering. I mean, everything is at the touch of your hands. But I do think there’s an acceleration of how we use technology. We’ve now learned how to do virtual tours in our leasing. And I’m excited to learn how to best service everyone moving forward through this enhanced premium on technology that will ultimately bring us all together as a stronger community.
All right. Crystal, I’m going to steal the technology idea because you can also expand it, I think, to another concept that’s been this idea of hubs and spokes where there’s satellite offices all over the place because people can work from anywhere.
And I’d like to know kind of Paul and Martin’s view on where Salesforce expects that to go, wants it to go. Is that a desirable outcome for either of your teams to end up in a place like that? Or is that something that is not so desirable? Or are you just rolling with the punches? And maybe just keep going in the same order, Martin.
Kind of straying outside of my area of expertise, but I think we’re open to evolving our workplace, our real estate strategy to meet the changing needs of the business, right? And certainly if a hub and spoke kind of model makes sense for what we’re trying to do to support success from anywhere, give employees that flexibility to be able to do what they need to do wherever they need to do it.
But again, still fully committed to our named towers around the world, it’s kind of the hubs, if you like, of that strategy going forward. We’re building a tower in Tokyo right now. Sydney Towers is under construction. Chicago’s coming up in a couple of years. So we’re still fully committed to those major hubs. What the spokes look like then? I’m not sure. Are we talking 60,000 spokes, 60,000 people working at home?
I’m not really sure what that looks personally, but I do also want to just go back to something that Paul brought up earlier, which is the equitable experience. That’s something that we’re really, really focused on. When you think about that in hub and spoke experience, if we say that all of these different hubs have very rudimentary, basic AV capabilities, and how does that connect to the hub, which has got all the bells and whistles and the most sophisticated AV capabilities.
And then how does that connect to people’s homes where people have invested a lot of time, and money, and learning how to have a good video call from home. We were trying to figure out how does all of that come together, and how do we ensure that equitable experience for everyone, regardless of where they’re joining the meeting from, whether it was their home, one of these spokes or hub. That’s something that we’re really thinking about a lot, and obviously there’s a big technology play in that.
Yeah. And is Salesforce making provisions for providing home technology that matches or somewhat matches the office space?
It’s amazing how creative some of our folks have gotten. I remember when this all started a year and a half ago, every single meeting started with “You’re on mute. Your camera’s not working.” And now here we are, a year and a half later. You don’t hear that anymore because people have become used to this.
They’ve become somewhat AV experts, but some of our folks have got these big lighting grids, lighting gear, and these professional cameras, and it looks like were in a TV studio, then you still got some folks who are leaning into the laptop my mom and my dad, “Can you see me? Is it okay? Can you hear me okay?” But we have provided employees with the stipends to make their home office more workable for them.
And they’re free to whether they would invest in a sit stand chair or, sorry, sit stand desk, or a chair, or a camera, that’s up to them, but we’re providing guidelines to people in how to make their home office experience better, including ergonomic assessments and things like that.
Yeah. Paul, I guess a similar question, are there advantages to Google to these smaller satellite, you could call them offices where people may group up because they live in similar areas and it’s not intentional. Is that something that is positive for Google? Or how do you think about that?
Well, I think there’s two conversations we’re having, right? One, which is to Martin’s point, we now have 120,000 satellite offices. And so to the extent that… and we’ve enabled them with the same kind of ergonomic and technical enhancements. So everyone has kind of now fitted their office to best perform in their home environment. I think we’re looking at this two ways. One is the importance of place and bringing people together.
The larger hubs in the urban environments, not only benefit Google, there’s a diversity of talent, there’s a diversity and of environment, there’s the kind of urban nature of many of our offices yield to connectivity beyond just Google. It’s connectivity to the community, right? The opportunity to give back. And so we’re still looking at creating hubs and enabling hub locations for workers.
If they choose to have a different location, we’re enabling some of that. I think the kind of three day workweek also creates a larger catch basin. So people in New York who might live in Philadelphia may choose to commute to New York three days a week versus five days a week from Philadelphia.
So kind of in that hybrid model, it is creating a little bit different or a potential different dynamic, but we still think the office, the importance of bringing people together, and the ability to collaborate is really important. And the smaller environments may not yield the same result as what we’ve been able to in many of our hubs. So I think certainly we’ll learn a lot over the course of the next couple of years, but that is the direction we’re headed.
Can I just offer something more on the connection to the community because we’re obviously deeply connected and agreeing with our communities as well. In our named towers around the world, we have what we call the Ohana Floor, which is the very top of the buildings, which are social spaces, hospitality spaces that are available nights and weekends for local community organizations to leverage further fundraising events or celebrations or whatever that they want to use.
And we just cannot wait to reopen them because we so firmly believed in the power of community, and connection, and giving back, and business being the biggest force for good in the world. So we can’t wait to reopen those Ohana Floors and get back into the community and have those connections again. I just wanted to throw that plug in there.
That’s great, Martin. And I think we’re kind of circling a similar conversation, although we’re in different parts of the country and even in different parts of the vertical around real estate, where we’re kind of circling the same concept of live, work, home, having to merge in a manner that is satisfactory to everyone. There’s a number of people who are on board with that, right?
There’s an article today in the BBC that just says we’re going to go back to five day work weeks. We just need to wait this thing out. I’ve heard that from a number of people over the course of the pandemic. Well, many of them are in real estate, because you have to take such a long view on your investment that a year or two, the blip, right?
And why does this matter? So I want to take a quick poll here around who thinks that that may actually be the case that we’re living through a moment we’re going to learn from, but actually when it gets down to push comes to shove, we’re going to be close to a five day work week again.
I assure you that we go through cycles. I assure you that this will be a change to the way we operate as everything else is a change to the way we operate. However, I can also say having been in my office through this moment in time, collaboration and creativity is not the same when you’re in your apartment as it is when you are in your office.
And so I think that the face and the workstations, they’ll modify, but the truth is productivity over long spans of time drop when people are isolated, mood drops, depression. There’s a moment where when the doors opened and people came back, they laughed and laughter increases blood flow and blood flow increases health. I mean, I think there has to be a part of a correlation of building the bigger community once people feel safe, and it may be in their own time.
I think Crystal mentioned 9/11 happened in New York and it was, “We’re never going to build another office tower. No one is going to lease the top floors.” And what we did see was a whole host of new technology-enabling security at the ground floor, which initially was really invasive and suddenly it just became part of your expectation of arrival in a building.
And I think real estate is slow to adapt, if you look at the integration of all of the BOSS Technologies and all of the capability that you’re now starting to see with this fast elevators. So all of those technologies are great, but I agree with Crystal. I think it’s a window of time that people will likely revert, and there’s a change that will happen as we go through this cycle.
But I envision we’ll be back to some version of five days a week with just a lot more flexibility, which is really what people want. It’s not that they don’t want to go to the office. They just want to have the flexibility that suddenly they have now. And so we’re going to figure out what that looks like.
And maybe it’s three days a week, maybe it’s five days a week, maybe every other week is five days a week. So us enabling that and integration of technology is important, right? Seamless technology is going to be really important to enable that flexibility. So I’m with you on the, it’s just a matter of when we start to go back in a more frequent and more regular basis.
I kind of this disagree respectfully. I don’t think we’re going to snap back. At least, I don’t think Salesforce has gone to snap back to Monday through Friday, 9:00 to 5:00. I think that that’s over. The past is gone.
I don’t think it’s a snapback either. Sorry. It’s definitely not a snapback.
I think we’re really focusing on flexibility more than anything, like you said, Paul. Giving employees the choice to meet their customers where it makes sense to meet their customers, whether over a video call at the customer site at their own office. That’s what’s crucial to us, is empowering employees to have that flexibility to work from where they need to work to get the outcomes they need to be productive.
And of course, our offices are going to be crucial to that because that’s, again, a connection to the community, connection to each other. I can’t wait to get back in one office with my team just to hang out and have a coffee and just catch up in person and not through a pane of glass.
I think it’s crucial. Humans are social beings. They need those social connections. I just don’t think we’re going to go back to Monday through Friday, 9:00 to 5:00. I think it’s going to be different. I think this is a true transformation.
I would just like to add that there’s just so many opportunities there. I think that the office is not going away, right? Downtowns, Center Cities, central business districts, uptown, Lower Manhattan, whatever, these places are not going away. This is part of the economic fabric of what makes these places work.
And so I think to me, regardless of if it goes back to whatever normal is or not, I think because of technology, more people are able to participate in generating wealth in these major cities or to create new businesses that could deliver some sort of service. And so I think instead of spending the majority of our time thinking about just getting back to normal, some of those normal things aren’t necessarily healthy for all of us, right?
And so while the infrastructure is there, it’s not going away. People are getting out of their houses, they are going to the mall and spending time out there, and they do want to have an office space, or they do want to have a place where they work and they can convene. I think the conversation could shift around how many more people can we include in the conversation.
How many more people could we engage in these office spaces, and these shared work environments? And so while I would say it’s not going to go back the way it was, I do think that there is going to be some sort of 9:00 to 5:00 workspace. Not sure if it’s the same people operating in that space, but I think work needs to stop at some point.
I would add that working from home, to me, means that I’m always working and I’m never stopping. You don’t leave the office, you just close down your computer. So that’s not healthy either, right? And so thinking about how work works and getting more people involved in that, I think is the next big idea and big step.