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2020: The Year That Changed Everything

How 2020 Has Affected the Way We Use Office Space

COVID-19 shutdowns closed offices across the Denver metro area. How will office space transform when(ever) employees finally return?

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The fallout from COVID-19 has decimated downtown Denver businesses over the past 10 months. But the losses haven’t just been relegated to restaurants and bars and boutiques. The once-booming office-space market has taken a devastating hit too. Doug Wulf knows this first-hand. As the executive managing director at the firm Cushman & Wakefield, Wulf recently has found himself in depressing territory. “Everything’s at a standstill,” says Wulf, who’s brokered more than 18 million square feet of space totaling more than $2.3 billion in considerations during his 34-year career. “We went from a very strong Denver market to one where everyone decided at the same time that they’d sit back and wait this out. And who can blame them?”

In December, the city’s available sublease space was up 53.7 percent year-over-year—as of the third quarter of 2020—a sign that office tenants have been re-examining the need for brick-and-mortar space for workers. New tenants are rare, and existing companies have been rethinking the ways their employees work, even considering abandoning offices entirely. Denver-based commercial real estate advising firm Avison Young reported this winter that while “there is still value in having an office for the purpose of fostering collaboration and culture,” Denver’s outlook was hardly rosy as corporations pushed a “tonal shift towards a more flexible working model.”

That flexible working model is causing uncertainty among brokers, architects, and developers who can’t be sure how Denver’s office-space market might rebound once COVID-19 begins receding. Wulf says it’d be naïve to think things will immediately shift back to the way they were before spring of this year, with packed offices and streets filled with lunch-breaking workers. “We’re in the midst of companies reconsidering how their employees are working, and that will take time,”

Wulf says, citing the ease with which many employees transitioned to a work-at-home environment this year. “There’s a subset of workers now who believe that they can work from home and continue their productivity,” he says. “You’re not getting all of them back.”

Jeff Engelstad, a clinical professor at the University of Denver’s Franklin L. Burns School of Real Estate and Construction Management, thinks the march back into offices will “be a relatively slow one,” but that employees eventually will want to return to a pre-COVID routine—and office time plays a major role in that. “We’re social creatures, and we’re not going to stop being social creatures,” Engelstad says. “Our lives are about senses and experiences, and office life was a huge part of that experience. But will offices be as full as before? No.” Engelstad surmises that there could be a structural change that the city undergoes, but admits he’s not exactly sure what that will look like. For the coming year and beyond, though, he says the important question becomes, How much less office space are we going to require?

The long-term future of Denver’s office scene is anyone’s guess right now, but recent statistics give us a snapshot of the here and now. This past summer, companies in the city tried to dump more than 3 million square feet of office space, according to the property brokerage firm CBRE. In August, the Downtown Denver Partnership reported that barely 15 percent of its membership who worked downtown had returned to those spaces. And, at least in the near term, there’s an expectation that work-from-home plans will continue, that is until companies decide how to tackle office-space issues and create safer situations for employees who want to come back.

“You’re probably not bringing people back to the same environment they left in March,” Wulf says. So what might Denver’s office workers see when they venture back downtown? Initially, the biggest changes will likely happen within existing buildings, where companies will make rapid alterations to accommodate employees. Within the city, the area ripest for quick retrofitting is LoDo, where the century-plus-year-old buildings were originally designed for industrial use and already have open setups that can be transformed with relative ease. Workers might expect their employers to buck the open-office concepts popularized by California tech companies that put dozens of people in one large room as a way to promote collaboration. In a post-COVID world, offices may be refurbished with an eye toward keeping workers separated from each other—potentially through individual offices, or through the creation of flexible space that allows a business to rotate a fraction of its workforce through the room’s same footprint, creating more social distance.

Developers and remodelers may also need to figure out ways to improve building ventilation, foot-traffic circulation, and promotion of outdoor space. That could include everything from grassy, outdoor patios to rooftop lawns to offices with windows that actually open. “Clean, fresh air will be in demand,” says Ryan Meeks, a senior associate at Denver-based Shears Adkins Rockmore Architects. But with that need for outside air comes other challenges: Meeks anticipates issues over energy efficiency as builders and remodelers try to balance a open windows with a building’s overall ability to maintain proper heating and cooling. “You’ve got to figure out how to get 11th-floor tenants back to work comfortably in an environment that is safe and healthy,” Wulf says. “Every office floor might have to have some kind of escape hatch [to the outside].”

Not surprisingly, developers that adapt quickly to the new market demands have the most to gain within a city that’s seen some corporate expansion even through the COVID-19-created economic crisis. “If you’re brave enough to build a new office here or to tackle redesign here, you’re going to have a huge advantage,” Meeks says. “The companies that make those changes are going to set the tone in Denver. Those are the ones that will create the future of how people work in this city.”

While the short-term slog probably portends continued tough times for downtown businesses coming out of the COVID collapse, Meeks doesn’t anticipate that the office-space market will suffer forever. “At the end of the day, Denver is Denver,” he says. “Ten years from now, people are still going to be moving to this city.”

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