The Jury’s Still Out On What The Future Of Office Will Look Like In Texas

Texas workers are heading back to the office in greater numbers, but the final layout, function and amount of time people are going to spend there remains up in the air.

The Lone Star State’s early reopening efforts, the vaccine rollout and a strengthening corporate push to bring people back are causing many small-to-midsized companies to return to the office. But while a slew of bigger firms is eyeing Labor Day as the marker for their own return, many are still holding off on big decisions about square footage, interior build-outs and long-term locations.

“We're seeing more folks come to us for shorter-term renewals if they have expirations in the short term, rather than make any super long-term decisions on those hoteling concepts or space changes,” Howard Hughes Corp. President Jim Carman said during a Bisnow digital summit June 23.

Temporary changes, like plexiglass and distancing, have been happening since the onset of the coronavirus pandemic in March 2020. But for all the chatter of more permanent structural changes to offices, little action has actually been taken yet.

“We're hearing clients talk a lot about ‘we space' versus 'me space,' or more collaboration, less private. And frankly, in talking to our other planners, there's a lot more discussion than [actual] action,” Granite Properties President and CEO Michael Dardick said.

Long-term design changes will be primarily determined by who is using the office, and more importantly, how they’re using it. Companies are still struggling to decide whether or not to embrace long-term flexibility and staggered worker presence in the office.

Cawley Partners CEO Bill Cawley said there’s distinct a gap between employee and employer requests: Employers want people back at the office, while employees desire more flexibility.

“I just think time is going to determine how all that gets worked out, because I kind of think the employer is going to win in the long term,” Cawley said.

Perkins&Will principal and Interior Design Director Brigitte Preston said that in some cases, firms are making permanent decisions about remote work. She pointed to a quasi-government client in Dallas that prior to the pandemic had leased 11 floors of an office building. Now, it has given back two floors and offered employees the long-term option to go fully remote.

“I see tech companies making changes, but then I also see this very conservative client making changes. So I think we really have to be open to the idea that change is going to come,” Preston said.

Preston’s firm works with many large, global clients. She noted that at this stage, there are five models under serious consideration: offices for collaboration and socializing only; regular full-time office use; activity-based office use with unassigned seating; the hub-and-spoke model; and workers being fully remote.

Ultimately, it all comes down to asking where people tend to do their best work.

“I don't think it's been resolved. I think we have to be open to any of these options, because you might have clients that come along and say, hey, this doesn't work for me,” Preston said.

For all the uncertainty, office brokers like Cushman & Wakefield Executive Vice Chairman Chip Colvill are confident that some larger office users are now more willing to make serious leasing commitments, and that the sector should see some pent-up demand from tenants that put off decisions in 2020.

“I think this year is going to be a slow pickup, next year will be a recovery year, and then 2023, hopefully things will get back to normal,” Colvill said.

Hartman Income REIT Senior Executive Vice President – Asset Management and Construction Dan Jones said that the number of office tours his firm has done is up 122% year to date, versus last year, which included nearly a full first quarter of normal activity.

“We think we're going to be above our budget for leasing this year. So it's very encouraging on our side,” Jones said.