Preparing offices for the age of distributed work

Authors
Claudio Martani1, Noemi Fiorot1, Andrea González2, Bryan T. Adey1, Joris Van Wezemael2
1 Infrastructure Management Group (IMG), Institute of Construction and Infrastructure Management (IBI), ETH Zürich, Stefano-Franscini-Platz 5, 8093 Zürich, Switzerland
2 Spatial Transformation Laboratory (STL), Institute for Spatial and Landscape Development (IRL), ETH Zürich, Stefano-Franscini-Platz 5, 8093 Zürich, Switzerland

The demand for office space is subject to a large uncertainty in the medium to long term, due to the growing momentum of home-office working mode. The COVID-19 crisis has proved that an extended use of the home-office working mode is possible, thanks to videoconferencing technology. Further, it is potentially even advantageous, reducing workers’ commuting time. However, it is yet unclear wo what extent this will become a trend after the pandemic. It is certain that in case of a large transition to a home-office working mode, the current fixed configuration of most offices does not guarantee an adequate use of space. In the future, co-working spaces might be better suited to cope with a more dispersed way of working. Conversely, these solutions are not adequate at present to accommodate the existing demand for traditional offices.
Flexible office configurations could help overcome the limitations of rigid designs (i.e. either fixed traditional offices or fixed co-working spaces) by postponing the final decision on usage until more information on needs becomes available. An example of a flexibly designed space might include offices predisposed to be easily converted into co-working spaces or even into other uses (e.g. residential units), depending on the future evolution of the demand for space. Such flexibility (i.e. the embedded options to convert the use of spaces) can facilitate building owners, tenants and users, as well as the wider society in maximising their benefits while the needs to be accommodated evolve. However, it must be considered that constructing flexible office space often requires substantial investment, meaning that embedding options to be triggered in the future can be expensive.
To ensure that these investments are made wisely, i.e. that the net benefit of all involved stakeholders are maximised, the use of the real options method is explored in this work. This allows modelling the uncertainty of future demand for office space and simulating scenarios to estimate the effect of alternative designs in the long-term. The method is tested on a mixed-tenants office building in Zurich for which ten designs are proposed and the triggering logic modelled. The designs have various degrees of flexibility and the triggering logic mimics the decisional criteria of a real owner. The results show that - under the investigated circumstances - a flexible design with movable walls to enable a periodic conversion of the unrented offices into co-working spaces, and with parceled technical elements to allow the conversion of long-time unrented offices into residential units, is the optimal decision for all involved stakeholders over the course of the building’s life. Conclusions on the strengths and limitations of using the real options method in this context are then drawn and an outlook of the envisioned future developments offered.