Lily: Amazon and Meta reassess office expansions to accommodate hybrid working arrangements
Shopify’s impending move into The Well – a massive retail, office and residential development covering 3.1 hectares in downtown Toronto – makes it one of many tech companies not shy away from further digs , even as their leaders adopt hybrid or remote working arrangements that result in staff visiting an office far less frequently than before the pandemic.
Google will similarly take over a new building in Toronto, despite Sundar Pichai, CEO of parent company Alphabet Inc., only requiring staff to work three days a week in the office. Amazon.com Inc.’s third office in Toronto will soon rise from 8 to 11 floors, although the e-commerce firm’s technology and corporate employees were told a year ago that they could work remotely two days a week.
Facebook’s parent company, Meta Platforms Inc., even revealed that 2,500 new hires announced in March would primarily be housed in a new space in downtown Toronto larger than its current MaRS Discovery District home, but declined to comment. share its size or location. Meta CEO Mark Zuckerberg has allowed all full-time employees to apply to work from home, if their job allows remote work.
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So why spend on new offices that are often larger than most employees will use for half the time or less? There are several reasons, says John Trougakos, a professor of organizational behavior and human resource management at the University of Toronto. “Part of that is the momentum they had before the pandemic and the plans they had that they’re just following through.”
Google and Shopify, for example, announced offices in Toronto before the health crisis helped spread remote and hybrid working. Google spokeswoman Lauren Skelly said the company continues to invest in offices, despite its hybrid model, because it believes “intentional, in-person collaboration is essential to drive innovation, support creativity and solving complex problems”.
As for Shopify, spokesperson Jackie Warren says the company is “digital by design” but continues to “value highly intentional in-person gatherings” a few times a year. She adds that Shopify was originally slated to occupy 254,000 square feet at The Well in downtown Toronto, with the option to expand up to 433,752 square feet.
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It comes as no surprise Michael Case, general manager of office leasing for downtown Toronto at real estate firm CBRE Group Inc. is slowing down.
CBRE found that downtown Toronto’s office vacancy rate was 2% before the pandemic — the lowest in North America and the third lowest in the world according to Case’s count. It has since risen to 11.6%, a rate he still considers healthy. By comparison, the national downtown office vacancy rate was 9.4% at the start of the pandemic and has since risen to 16.9%.
Case attributes slowing growth and rising vacancy rates to fading investor exuberance in the sector, which has already sparked layoffs at tech companies including Clearco, Hootsuite, Netflix Inc. and Shopify.
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But Trougakos says top tech companies are always keen on new offices, seeing them as a chance to move forward and create space for future needs. He thinks they see the splashy new offices as a “physical landmark” for a brand that can be a way to attract and retain talent, when the industry rebounds again.
These companies target those days at the office as being collaborative and creative, “as opposed to working upside down,” he says. “. . . Some of the spaces are going to have to be reconfigured to be more conducive to the new way people are going to work. »
While some companies will forever embrace remote or hybrid working and scale down or close offices, others will be more liberal on space or even strict on how many and what days staff must be in an office and when. he may be at home. “We’re past the point where there’s only one standard way of working,” says Trougakos. “Companies are going to have to figure out what works best for them and their employees.”
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