Work-from-home expected to change footprint of some companies

REMOTE working, work-from-home, or WAH (work-at-home) arrangements implemented as part of efforts to contain the spread of the novel coronavirus disease could lead to reconfigurations of leased commercial space for some time to come.

Michael Neita, chief executive officer (CEO), Victoria Mutual Property Services Limited (VMPS), told the Jamaica Observer that from the perspective of what is happening in that company's property portfolio, an increasing trend in work from home “will slow the near-term growth in the total commercial office space offerings of new office spaces in businesses that can facilitate remote working”. He made his comment in response to some notable relocations by local companies.

Neita said, “It [work-from-home] should not result in a net reduction in the rental space offerings, nor will it result in a reduction in the rental rates for prime office space. It may also spur the growth of short-term rentals in flexible office spaces that will be available to remote working employees of small and medium-size enterprises.” In some cases, it is reduced economic activity, not simply work from home, which has resulted in company relocations.

In May, Main Event Entertainment Limited announced that it would be switching its corporate offices from 70-72 Lady Musgrave Rd, Kingston. Management advised of the change of address of the company, which came into effect on May 15, 2021. The new address is now: Unit 2, Ardenne Emirates, 7-9 Ardenne Road, Kingston 10.

Launched in 2004, Main Event is no stranger to moving house in line with its operating needs. The Main Event operation was first housed at 18 Annette Crescent with 2500 square feet and a staff complement of six people. With an ever-expanding clientele, other companies were born including iPrint digital, M-Style and a western division in Montego Bay.

Before March 2020 the company had a staff complement of 200 plus employees and contract workers and operated from Lady Musgrave Road with offices also located in Barbican, Newport West and Montego Bay. However, Government measures taken under the Disaster Risk Management Act relating to social distancing and nightly curfews have resulted in a dormant entertainment sector. At year end December 31, 2020 profit declined 119 per cent to $115 million. And for the first quarter ended March 2021, management said that the novel coronavirus pandemic continues to impact business activity and performance.

Approximately 200 contracted persons are out of work until event activities resume. Company sources explain that the lease on the premises at Lady Musgrave Road was scheduled to expire May 31, 2021; and the company opted not to renew. Main Event Entertainment Group Ltd (MEEGL) currently occupies two properties at Ardenne Road, one which is owned and the other leased. Both premises can accommodate staff previously housed at Lady Musgrave Road. The company also continues to occupy 3 warehouses located at 2 Seventh Avenue, New Port West, Kingston 15 which houses operations, staffing and equipment.

Lottery and gaming company, the Supreme Ventures Group, relocated offices during 2020 in seeking to cut costs as the pandemic cramped the gaming instincts of clients. Operations manager within the group, Dennis Chung commented that this company is not alone as “Many have been forced to find cheaper spaces due to the pandemic. Others have reduced their footprint as their operation requires less staff and more integration of technology. Agents are primarily on the road and are working from home in many instances.”

In a decision taken in 2019 the Supreme Ventures Group consolidated its head office to its property at 9 Retirement Crescent. The square footage of the Retirement Crescent office is 9,000, compared to 11,000 square feet at offices previously occupied by Sagicor in new Kingston. With this relocation Chung, CEO of Supreme Ventures Shared Services, said that the group has saved approximately $50 million annually, and with the continuous focus on improving workspace efficiency, even more value added is expected. He outlined, “The move was part of the company's focus on improving its operating efficiency ratio through strategic cost management.”

Chung maintained, “We recognised not only the potential savings from moving into our own premises but also the opportunity to bring several operational departments under one roof for greater cohesion and engagement.” According to the manager, the group also successfully implemented a robust work-from-home programme which was in the pipeline since 2019.

“We were an early participant in the movement towards the 'new normal' and the 'new office space' where adequately equipped and technologically savvy team members can work remotely from home or any location of their choice. We are an equal opportunity employer and an employer of the future that understands that team members can operate anywhere in the world and still be efficient and effective,” he added.

Chung noted that 90 per cent of team members have the ability to work from home. For its offices the company ensures that the COVID-19 protocols are observed, and the Human Resources team continually reminds the wider group of those specific actions. Sanitisation has been increased and sanitisation stations are easily accessed throughout the building.

Chung concluded, “The Supreme Ventures Group is encouraged by the results of this strategic direction, particularly in the face of the challenges raised by the pandemic. With an accelerated expansion and growth strategy, the need to maximise the use of office space and more effectively streamline workflows became even more critical. By incorporating technological solutions and new processes the company has been able to create a successful work environment that extends beyond the physical parameters of the traditional corporate office.”

Commercial movements

Orandy Movers indicates that commercial moves have been cut in half since March 2020. Oral Williams, CEO of the company which has a large slice of the commercial moving market, said that most movements observed in 2020 were companies relocating to smaller properties that they already own. “A lot of them move into new places, as was pre-planned before COVID. We are currently doing the Ministry of Foreign Affairs, which is relocating downtown. It's their own new space [to which] they have relocated. For others, I am assuming that because of the downturn, [this is] why smaller office space is selected.”

Williams said there has been an uptick in business since the start of 2021, and that he believed many who were previously in a wait-and-see mode might begin movement again. For now, however, he said, “People are not too optimistic. They are hoarding their money.”

VMPS's Neita said that from the perspective of what is happening in that company's property portfolio, “Companies make choices based on their current rental location and commercial terms vis-a-vis the locations and terms for newly constructed or recently vacated rental properties. In addition, some companies develop and build their own commercial properties that they eventually move into, thus creating new locations for their operations and new rental space for other entities.”

He stated, “We have experienced some of this movement, with a long-standing tenant finally completing construction of their commercial office space and vacating our rental property. The space was then leased to a new 'grade A' tenant who will occupy the space soon. This is normal activity in the commercial office space market.

“Companies move for various reasons – the need for additional or less office space, the need for newer or upgraded office space, to change the location of their operations, and also commercial terms of their tenancy.”

Neita stated that he believed work from home will become a significant factor in the Jamaican employment landscape going forward. He concluded, “It will probably mean that a significant number of employees who would normally work from commercial office locations will work remotely. The estimates range, depending on the type of operations, anywhere from 20 per cent to 70 per cent of the staff complement.”

CHUNG...many have been forced to find cheaper spaces due to thepandemic. Others have reduced their footprint as their operationrequires less staff and more integration of technology shouldnot result in a net reduction inthe rental space offerings, norwill it result in a reduction inthe rental rates for prime officespace

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