In 2018, outdoor retail giant REI began work on a company headquarters designed to mimic an outdoor playground of sorts. The eight-acre campus, located in the Seattle suburb of Bellevue, was meant to be more than just an office; it was supposed to offer employees a host of amenities and get them excited about the products they were developing. The company was slated to move employees onto that campus in the summer of 2020.
But the coronavirus pandemic changed that plan, as it changed the way many companies have had to operate over the past nine months. Now, REI is abandoning its plans to open up that campus and is putting it up for sale. And there's a good chance other companies with large campuses will follow suit.
Will large office campuses become a thing of the past?
Before the pandemic, remote work was considered a special perk and a privilege. Now, it's becoming the norm. And while some companies will no doubt seek to bring staff back into the office once that becomes a safer prospect, many companies are already planning to continue the remote work setup well into the future -- even once the pandemic is behind us.
Adopting permanent remote-work plans has its benefits for employees and employers alike. On the employee end, there's savings from not having to commute and more flexibility. On the employer end, there's savings to be had on office building leases, supplies, and overhead. Remote-work setups also give companies more hiring options. Rather than limit candidates to a single geographic location, companies can now hire from anywhere, giving them access to a wider pool of talent.
But while a shift to remote work may be advantageous to a large number of companies, it could really hurt real estate investors. There's already fear that office buildings won't recover for years and that post pandemic, vacancies will abound as companies seek to dump or downsize space. And large company campuses, like the one REI invested in, may also become needless in an age when workers aren't required to gather under the same roof.
Now to be clear, REI's motivation in selling its headquarters is also to drum up cash for the business and put itself on more solid financial ground. Like many retailers, REI got hurt when its stores were forced to close earlier on in the pandemic. And while the retailer had a strong summer, it still very much needs to play catch up.
Helping REI at a time when so many other retailers are utterly starved for revenue is the fact that the pandemic has sparked a health trend, and more consumers are looking to embrace outdoor activities in the absence of other things to do with their time. But selling its headquarters makes sense from both a financial and logistical standpoint, and in the near term, other companies may seek to go a similar route -- partly to free up cash and partly because the concept of a centralized employee location is slowly but surely becoming unnecessary and even outdated.