4 ms·

We have done the same at Zendesk. We've reduced our office footprint but have kept our hubs open with large enough offices open for the occasional large on-site

We have done the same at Zendesk. We've reduced our office footprint but have kept our hubs open with large enough offices open for the occasional large on-site and for easier team collaborations, as well as space for anyone that prefers to work in an office environment. I like the model, but I question long term economic viability of owning that much office space with mostly low utilization and only occasional spikes.

frognumber 4y ago
I suspect a pathway might be: 1) Open offices for collaboration 2) Shared offices for collaboration (like co-working spaces) with reservations, as well as off-site retreats to places like Hawaii. This is cheaper than leasing in big cities. 3) Cost-cutting during the next recession killing those fancy co-working spaces and retreats 4) Loss of team cohesion
ilyt 4y ago
Could rent it as co-working space on the rest of the days
- nordsieck 4y ago
  > Could rent it as co-working space on the rest of the days Or just downsize the office to the point where utilization is high and rent out co-working space themselves during the "spikes".
- deleted 4y ago
  [deleted]
toomuchtodo 4y ago
I'd be interested what the financial analysis looks like leasing or owning hubs vs a cadence of offsites annually remote first orgs usually hold, considering meeting space + hoteling for staff during the meet. I'll chip in for this analysis and blog post!
- WorldMaker 4y ago
  That sounds like an interesting analysis, but I'm curious if this is one of those moments where economics around it will be deeply shifting over the next few years and any analysis will likely have to adjust frequently. For instance, even before the remote work shift in 2020 many cities were heavily competing on conference and hotel space allocations for an interesting variety of economic reasons (tourism dollars that float alongside, for instance). As more "corporate Downtown" downsizes their office footprints to go more remote, some of that real estate inventory is going to go to apartments and condos, but also I would expect that there would be just as much pressure to convert it to hotels and conference space and WeWork-style hoteling office space. I wonder if that's going to snowball into dirt cheap conference prices in a growing list of cities. Especially if you start to factor in non-traditional "hub" cities (especially those non-traditional for tech). I've heard that's an appeal of Denver, Colorado as an annual onsite retreat city for remote first orgs as it has a large conference and hotel inventory that still has some very cheap periods outside of the usual tourist periods. I can point out that cities like Louisville, KY and Indianapolis, IN have massive inventories of hotel and conference (and exposition) space with some incredibly cheap calendar windows and still heavily competing among each other for more hotel/conference inventory every year. (I can also suggest which of those two cities in particular has better tourism options, but that may as much be hometown bias, so I'll save it.)
  - code_biologist 4y ago
    I'll also point out that Louisville has amazing whiskey distilleries downtown, the "urban bourbon trail". Great for hashing out tech and product disagreements!
  - quacksilver 4y ago
    I have been to some fun offsites in Puerto Vallarta. I imagine other Mexican / central American towns/resorts are also available. It was cheap compared to a US city, everyone could fly there quickly and you could hang around as a tourist by booking FTO afterwards and delaying your flight back. (company didn't care if you picked a cheaper flight home a week or two later when expensing).
- 4y ago
CydeWeys 4y ago
> I like the model, but I question long term economic viability of owning that much office space with mostly low utilization and only occasional spikes. Oh for sure it doesn't make any sense, and is driven solely by the inertia of already having the office space. You'd let it go over time as leases lapse until you're down to just a tiny amount that's facing high utilization.
BurningFrog 4y ago
It also makes sense as a hedge if the WFH trend fizzles out.
- MonkeyClub 4y ago
  It won't fizzle out, if the 15-minute city plans are anything to go by: work global, live local.
whizzter 4y ago
Depends, already years ago there was a hub-n-spoke-like model for office buildings where you had smaller offices for smaller companies that had the ability to temporarily rent the larger "shared" areas of the building. It didn't really take off afaik, but with more bigger and stable tenants making a larger bulk of these it might actually take off a bit as a model.
pkrotich 4y ago
This is where co-working space (WeWork?) would work well. I just signed a 3 months contract for my team to meet at co-working place as needed to kickstart a project which in person meeting is important.
TheRealNGenius 4y ago
[dead]
octodog 4y ago
Provided employee productivity is the same (or better) this model still has Zendesk ahead. It doesn't really matter if utilization is low - if you've closed 10% of your offices you're paying 10% less rent than you were before. Would there be opportunities for further efficiency by fully closing them and renting space a few times a year? Possibly, yes. But that doesn't mean the current model isn't an improvement on the previous one.
Aeolun 4y ago
Well, you were paying for it before. Obviously it’s not a financial burden, or the company would have been unviable even before the pandemic. If you spend 10M/annum on salaries, is your 1M/annum for an office really a big burden?

frognumber 4y ago

I suspect a pathway might be: 1) Open offices for collaboration 2) Shared offices for collaboration (like co-working spaces) with reservations, as well as off-site retreats to places like Hawaii. This is cheaper than leasing in big cities. 3) Cost-cutting during the next recession killing those fancy co-working spaces and retreats 4) Loss of team cohesion

ilyt 4y ago

Could rent it as co-working space on the rest of the days

nordsieck 4y ago
> Could rent it as co-working space on the rest of the days Or just downsize the office to the point where utilization is high and rent out co-working space themselves during the "spikes".
deleted 4y ago
[deleted]

toomuchtodo 4y ago

I'd be interested what the financial analysis looks like leasing or owning hubs vs a cadence of offsites annually remote first orgs usually hold, considering meeting space + hoteling for staff during the meet. I'll chip in for this analysis and blog post!

WorldMaker 4y ago
That sounds like an interesting analysis, but I'm curious if this is one of those moments where economics around it will be deeply shifting over the next few years and any analysis will likely have to adjust frequently. For instance, even before the remote work shift in 2020 many cities were heavily competing on conference and hotel space allocations for an interesting variety of economic reasons (tourism dollars that float alongside, for instance). As more "corporate Downtown" downsizes their office footprints to go more remote, some of that real estate inventory is going to go to apartments and condos, but also I would expect that there would be just as much pressure to convert it to hotels and conference space and WeWork-style hoteling office space. I wonder if that's going to snowball into dirt cheap conference prices in a growing list of cities. Especially if you start to factor in non-traditional "hub" cities (especially those non-traditional for tech). I've heard that's an appeal of Denver, Colorado as an annual onsite retreat city for remote first orgs as it has a large conference and hotel inventory that still has some very cheap periods outside of the usual tourist periods. I can point out that cities like Louisville, KY and Indianapolis, IN have massive inventories of hotel and conference (and exposition) space with some incredibly cheap calendar windows and still heavily competing among each other for more hotel/conference inventory every year. (I can also suggest which of those two cities in particular has better tourism options, but that may as much be hometown bias, so I'll save it.)
- code_biologist 4y ago
  I'll also point out that Louisville has amazing whiskey distilleries downtown, the "urban bourbon trail". Great for hashing out tech and product disagreements!
- quacksilver 4y ago
  I have been to some fun offsites in Puerto Vallarta. I imagine other Mexican / central American towns/resorts are also available. It was cheap compared to a US city, everyone could fly there quickly and you could hang around as a tourist by booking FTO afterwards and delaying your flight back. (company didn't care if you picked a cheaper flight home a week or two later when expensing).
4y ago

CydeWeys 4y ago

> I like the model, but I question long term economic viability of owning that much office space with mostly low utilization and only occasional spikes. Oh for sure it doesn't make any sense, and is driven solely by the inertia of already having the office space. You'd let it go over time as leases lapse until you're down to just a tiny amount that's facing high utilization.

BurningFrog 4y ago

It also makes sense as a hedge if the WFH trend fizzles out.

MonkeyClub 4y ago
It won't fizzle out, if the 15-minute city plans are anything to go by: work global, live local.

whizzter 4y ago

Depends, already years ago there was a hub-n-spoke-like model for office buildings where you had smaller offices for smaller companies that had the ability to temporarily rent the larger "shared" areas of the building. It didn't really take off afaik, but with more bigger and stable tenants making a larger bulk of these it might actually take off a bit as a model.

pkrotich 4y ago

This is where co-working space (WeWork?) would work well. I just signed a 3 months contract for my team to meet at co-working place as needed to kickstart a project which in person meeting is important.

TheRealNGenius 4y ago

[dead]

octodog 4y ago

Provided employee productivity is the same (or better) this model still has Zendesk ahead. It doesn't really matter if utilization is low - if you've closed 10% of your offices you're paying 10% less rent than you were before. Would there be opportunities for further efficiency by fully closing them and renting space a few times a year? Possibly, yes. But that doesn't mean the current model isn't an improvement on the previous one.

Aeolun 4y ago

Well, you were paying for it before. Obviously it’s not a financial burden, or the company would have been unviable even before the pandemic. If you spend 10M/annum on salaries, is your 1M/annum for an office really a big burden?