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As more work from home, future of office space is unclear

A "for lease" sign scene in the skywalk in Des Moines Monday, Aug. 31, 2020. As more work from home, future of office space is unclear. (Zach Boyden-Holmes/The Des Moines Register via AP )

A “for lease” sign hangs in a skywalk in Des Moines on Aug. 31. Forty-two percent of U.S. workers are now working from home full time, accounting for more than two-thirds of all economic activity in the nation. (Zach Boyden-Holmes/The Des Moines Register via AP )

Des Moines Register

DES MOINES, Iowa (AP) — Mike Mallaro spent the better part of last year touring office space to lease or purchase for his growing company, VGM Group Inc., in Waterloo.

The plan was to expand into at least 50,000 square feet of additional space, with the goal of adding hundreds of employees. Then the coronavirus pandemic hit, and, as with workplaces across the country, 90% of VGM’s staff began working from home. VGM is an employee-owned company that offers professional services to help businesses grow.

As businesses reopened, Mallaro started planning his staff’s return to the office, and “came to a realization that I didn’t have before that: ‘Jeez, just about all of our jobs can be done remotely.'”

The Des Moines Register reports Mallaro’s plans to expand the company’s office space are on hold — indefinitely.

“We’re still a growth business so I believe we’ll continue to add positions, and I can’t say we’ll never need more office space,” said Mallaro, CEO of VGM Group. “Whereas I would have said by 2021 we would definitely have additional office space, now I would say definitely in the next five years we will not have it.

“We can accommodate a lot more employees without having to add space.”

The way Americans work is undergoing a massive change. Companies across the country are announcing plans to reduce the size of their offices in favor of a remote workforce, even if a coronavirus vaccine becomes available and other aspects of life return to their pre-pandemic normal.

The value of teleconferencing software company Zoom has increased almost seven-fold this year, and tech companies like Facebook, Twitter, Square and Shopify have unveiled plans to let a majority of their employees work from home in the long term.

When it became clear that the coronavirus was easily transmittable, companies around the world that didn’t provide essential, in-person services shut down their offices and transitioned to a work-from-home model.

According to a Stanford University study, 42% of U.S. workers are now working from home full time, accounting for more than two-thirds of all economic activity in the nation. That’s up from just 3.6% who were working from home either full- or part-time in 2018, according to Global Workplace Analytics, a consulting firm that researches the future of work.

The question is how much of the work-from-home model will continue post-pandemic.

Based on how many U.S. jobs feasibly can be done from home, Global Workplace Analytics predicts 25% to 30% of the workforce — upwards of 47 million people — will be home for at least part of each week by the end of 2021.

Kate Lister, president of Global Workplace Analytics, said she believes people who were working remotely a few days a week before the pandemic will likely increase their time at home, possibly to full time. Those who were new to remote work will want to increase their proportion of at-home work post pandemic.

“The genie is out of the bottle, and it’s not likely to go back in,” she said.

Given the expected shift, Moody’s Analytics predicts commercial vacancies will reach historic highs of nearly 20% in the next two years — levels not seen nationally since the recession of 1991.

Mallaro, the CEO of VGM Group, said his employees have expressed interest in a hybrid model, working in the office a few days a week and at home the others. They have particularly mentioned child care and online education as reasons to stay home.

Others want to leave behind their commute — about a third of VGM’s 1,000 employees live in small towns about 30 minutes outside Waterloo.

“For them to not have to drive that, it matters,” Mallaro said.

Copyright 2021 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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