This article was written by Arlington Economic Development.
The pandemic has forever altered the commercial real estate landscape.
Flexible work environments have become one of the most critical factors in attracting talent, but many people are unsure about the role that office space will play in the future of work. While many companies put real estate decisions on hold, commercial real estate brokers are reporting more interest in office tours, and some companies chose to expand their office footprint despite the uncertainty brought on by the pandemic.
Arlington Economic Development interviewed a local broker and companies that have recently expanded or are looking to expand their office footprint to understand more about what is driving these decisions and how the pandemic has changed how company leadership and employees think about the office.
Business and employee growth is the number one driver for those that have taken new office space during the pandemic or are seeking to expand.
“The National Capital Region has recently received a significant amount of equity funding, and there is a lot of merger and acquisition activity in the area,” said Edward Saa, Co-Founder and Managing Principal at Ethos Tenant Co. “These businesses are securing funding and growing out of their existing footprint. This is especially prevalent among companies currently headquartered in a coworking environment that are ready for their own standalone office space.”
Rios Partners started working with Ethos Tenant Co. about two and a half years ago to identify new office space. Rios put its search process on hold during the early days of the pandemic. When Rios decided they were ready to return to the office, their space needs had more than doubled from the amount of space they had identified before the pandemic due to rapid company growth.
Rios Partners CEO Joshua Riojas said that employees, not company leadership, drove their decision to return to the office. “Employees asked to come back to the office and meet people. Everyone didn’t want to come daily, but our work is generally team-oriented, and video calls cannot fully replicate in-person meetings,” Riojas said.
Lynch Consulting also recently moved from Rosslyn to Crystal City and is looking to hire about 20 more employees. “Crystal City is just a few Metro stops from the Pentagon, and we have a lot of Department of Defense contracts,” said Patrick Lynch, CEO and Managing Partner. “We also have civilian clients in D.C., and we are just a few metro stops from them. Arlington and Virginia are very business-friendly locations for our company.”
Lynch also cited employee interaction as the primary value of office space. “Having face-to-face interactions is important,” he said. Lynch Consulting still has a flexible schedule and no required days in the office, but Lynch reported that his teams still come to the office for staff and client meetings.
Marine Acoustics, a Ballston-based engineering firm, is looking to expand its office space. “We are posturing to grow, so expanded office space will give us a bit more breathing room,” said Steve Psaras, Vice President, Virginia Operations.
Psaras said the new office space would accommodate more client meetings and secure teleconferences for their government clients. Their clients, including the Office of Naval Research, have an increased need for meeting space during the pandemic.
“We sometimes host up to a couple of meetings a week in our spaces. The Office of Naval Research all but stopped hosting live conferences during the pandemic,” Psaras said. “With the ease of access that we allow within our facility as well as safety controls in place, it becomes more convenient for them to host live meetings at our facility rather than in their own.”
Marine Acoustics also has a flexible telework policy. “We’re not dictating where employees complete their work, but people are finding the office to be more productive for certain kinds of work. Most employees will spend at least three days in the office per week because they know that more synergy and face-to-face communication are required to get things done,” Psaras said.
“Companies are still navigating the uncertainty of the past few years,” said Tim Jacobs, Co-Founder and Managing Principal at Ethos Tenant Co. “But as we’ve seen with our clients Rios Partners, Lynch Consulting and Marine Acoustics, businesses are still finding value in gathering in the office, while also maintaining a flexibility for their employees.”