Reflections, lessons, & gratitude from one of the craziest years in recent memory
Five years ago, we started this company around the idea that offices and workspace could be more flexible, more inspiring, more human. If you had told me back then that a majority of offices around the world in 2020 would be sitting largely empty for months on end, there’s no way I would have believed you. Who would have?
2020 has been a year unlike any other. While it’s probably too early to assess the true impact of this crazy year, it’s not too early to reflect on what unfolded and search for ways we can carry both our personal and professional learnings into 2021 and beyond.
First and foremost though, we have to acknowledge the painfully obvious. The coronavirus pandemic has turned into one of the most tragic events in history. Around the globe, more than 1.6 million people have perished. It truly boggles the mind. In addition to the catastrophic health and human toll the pandemic has had, the economic fallout has been harrowing. Tens of millions have filed for unemployment. Entire industries and sectors have been decimated. It’s hard to compute, even as I sit here typing these words. It goes without saying, that our thoughts and prayers are with all of those affected.
As we continue facing record case and death counts daily, one can only hope the Pfizer-BioNTech vaccine rollout -- which was approved in the UK last week, and in the U.S. just this past Monday -- continues unimpeded. In a year of seemingly endless adversity, the development, approval and distribution of a major vaccine in less than a year marks one of the most impressive accomplishments in modern medical history. Previously, the quickest vaccine development program was the 4 years it took to make the mumps vaccine in 1967. A silver lining without question.
Before we jump into some of our thoughts on the year that was, I’d be remiss if I didn’t take a moment to express my deepest gratitude to so many people who went above and beyond this year. To my fellow colleagues and Knotelers, thank you for your perseverance, your resilience and your passion. To our customers and our partners, thank you for your patience and your trust, without which none of this would’ve been possible. And lastly, to all those on the front lines battling the pandemic: you all are the real heroes of 2020. Thank you.
With that, let’s jump in.
WFH, Zoom Fatigue, & Experimentation
For many white collar, service-based and knowledge workers, 2020 morphed into one of the largest-scale work-from-home experiments ever conducted. Tens of millions of people adjusted, almost overnight, to working from their homes. Bedrooms became offices. Kitchens became conference rooms. Parents became teachers.
Despite the hiccups, the back pain, and the learning curve, the experiment largely worked. Many companies reported improvements in productivity, while many employees cherished the extra flexibility of being able to forego commutes and spend more time with family. While we may be getting our work done, it’s certainly not without a cost.
Believe it or not, it was pretty clear back in March that business as usual was over. Like many companies, we started taking the necessary steps to safely ensure business continuity by prioritizing the things that really matter. In late March, we quickly got to work, ensuring our customers were safely navigating office shutdowns across our global markets and helping them prepare for their inevitable returns.
From Paris and London to Berlin and Amsterdam, our teams worked around the clock to help customers implement health and safety measures that encompassed everything from sanitizer stations and wayfinding signage to new check-in protocols and dedensified design configurations. We even helped a couple of our London-based customers move-in during the pandemic (Busuu and Turo in London, OpenClassrooms in Paris).
As I told John Goodwin on CBS Sunday Morning over the summer, “In some ways, this virus is a workplace virus, it’s an office virus. This is one of the few things that has ever happened that shut every office in the world.” Throughout most of our conversations — whether with our employees, our customers, industry experts, owners, partners, and other stakeholders — there was one theme that continued to emerge over and over again.
Word of the Year: Flexibility
Here at Knotel, we’ve been clamoring about the importance of business and real estate flexibility since the company’s inception. My co-founder Edward and I founded this company around the idea of flexibility: the ability to quickly adapt to evolving circumstances, new information, and external dynamics. Another way to think about it? A change readiness score. When something goes wrong, and we all know inevitably it will, how ready is your company to adjust and pivot. How long will it take you?
Five years later, in the midst of a global pandemic, flexibility has never been more important. And not just within a company’s real estate practice, but rather across every corner in your business. Survey after survey shows that employers and employees both want increased flexibility, not just as a stop-gap fix until the pandemic is over, but as a permanent staple of the post-pandemic new world order.
For most commercial tenants -- unlike the Pinterests and Salesforces of the world who can afford to pay $100M lease termination fees -- the appeal of flexible workspace arrangements seems obvious now as companies aggressively look to shed long-term commitments, mitigate their risk, and reduce capital expenditures. Even Real estate owners can also benefit from flex by locking-in near-term revenue rather than run the risk of climbing vacancies. It’s likely the reason we’ve been seeing increased interest from our owner partners on management deals that give them new channels and more access to flex-minded tenants.
If Flex 1.0 was about where people work, Flex 2.0 will be increasingly centered around how people work. Office and workspace flexibility will encompass much more than just space needs and lease duration; it will now incorporate a holistic understanding of how a company works and optimize for the employee experience. Despite the massive disruption the pandemic has had on the commercial real estate sector, JLL still believes that 30% of office space will be consumed flexibly by 2030, although they concede it will happen “in a different form than it took before the pandemic.”
That’s why it’s not surprising that we’re increasingly seeing our global enterprise customers come to us not just for space requirements, but rather for service-based consultation on everything from safety-first workspace design, portfolio optimization, IT configurations, employee experience, and much more. It’s also why we recently announced our expansion to Australia, where nearly a third of our enterprise roster has a footprint and is seeking guidance on how to responsibly empower their employees with safe and productive workspace.
The New Normal: Hybrid Work
If there’s one thing we learned for sure in 2020, it’s that the new future of work is hybrid. By my count, nearly every Fortune 500 company has announced their intentions to embrace a more hybrid and flexible approach to work. In short: not everybody will be in the office five days a week anymore. It’s not a binary “all-in-the-office” or “all working remotely” calculation. It’s a more nuanced and sophisticated approach to balancing the realities of the moment with the desire for more operational and real estate flexibility.
Over the course of the last several months, I’ve had conversations with Heads of Real Estate from Uber, Dropbox, Randstad, and more. Nearly all of them talked about an increasing desire for workspaces focused on employee experience, shorter leases, and an emphasis on health and well-being. In my conversation with Xerox’s Head of Real Estate last week, Neil Valler embraced the idea of flexibility as a no-brainer. “Suddenly we may have to expand somewhere, and contract elsewhere. The only way of doing that sensibly -- and managing your costs over a period of 3 years, 5 years, 10 years -- is through a flexible and agile model. The future is flexible for sure.”
The need for an agile real estate portfolio with flexible working options will likely increase, especially as the vaccine continues to be disseminated to the wider population, and we begin to resume some semblance of normalcy. Even companies that have extended their WFH policies well into 2021 seem primed to embrace a more hybrid, flexible and decentralized approach to work.
Amazon recently announced its commitment to 900,000 square feet of additional space split between New York City, Phoenix, Dallas, Detroit, San Diego, and Denver. Facebook is expanding its New York footprint with 730,000 additional square feet in midtown Manhattan. Even Pinterest, despite the mammoth $90M lease termination fee, announced they would be keeping their current office.
Of course when offices do re-open on a larger scale, they will look and feel different. There will be substantial physical changes (temperature checks, plexiglass dividers, sanitizer stations, spaced-out desks, reduced occupancy, wayfinding signage, etc.) but also cultural and social changes. There will be a lot of experimentation and in many cases, the role of the office itself will forever be changed.
Building an Anti-Racist Company
I, like many others, was heartbroken watching the video of George Floyd’s senseless death on video back in May. The incident left me outraged, incensed, devastated, yet not entirely surprised. In addition to sparking global protests and a mass movement to dismantle systemic racial justice, the murder of George Floyd felt personal to me, to us. In that vein, it has galvanized us as an organization to become much more vocal, active, and relentless in our pursuit of pursuing long overdue racial justice in this country.
Talk is cheap, so we got straight to work. Earlier in the summer, we encouraged our teams to express themselves on social media and take time away from work to protest and support the cause. In addition to matching donations for social justice and anti-racism causes, we worked closely with our Black Excellence employee resource group and observed Juneteenth, an annual holiday commerating the end of slavery in the United States.
We’ve also been actively investigating every corner of the business — vendors, supply chain, pay disparities — to look for ways to contribute to the cause of equality within our ranks, and our broader ecosystem. More recently, we launched the Knotel Diversity Series, a program born out of our active commitment to build and grow an anit-racist company. We were beyond fortunate to be able to speak to some of the most influential Black and female leaders across the corporate spectrum.
- Verna Myers, the VP of Inclusion and Strategy at Netflix
- Judith Williams, the Chief DIversity Officer at SAP
- Rachel Cheeks-Givan, the Global D&I Lead at Pfizer
- Shona Pinnock, the Director of Diversity at Meredith Corporation
- Sonja Gittens Ottley, the Head of D&I at Asana
We remain eternally grateful for the wisdom and insights these women shared during our conversations. In fact, their perspectives were so inspirational to me, and to our company, that we’ve dedicated an entirely separate post to analyzing their rich and meaningful insights. This series was meant to educate and drive meaningful change by amplifying voices with expertise in workplace inclusion, diversity initiatives, and progress.
2020 will undoubtedly stand out in the history books as one of the most unique and difficult years in modern history. But, despite the hardship, the pain and the sadness that 2020 brought, there were moments of hope and reason for optimism. It appears the light of the end of the tunnel is growing ever so slowly closer. I remain hopeful for the future, and look forward to rolling up my sleeves, alongside my colleagues, to bring that vision to reality.
Sincerely, Amol Sarva CEO, Knotel