While Brookfield's tenants continued to pay their rent during the second quarter, most of their employees worked from home. That trend will likely continue for the foreseeable future. What's unclear is if some stay there permanently, which would lessen the need for office space. Brookfield addressed this topic in its second-quarter shareholder letter. CEO Brian Kingston wrote:
While there has been some discussion over the last several months as it relates to the 'future of the office,' it is our belief that a corporate office represents much more than a place for employees to sit every day; companies utilize their offices as incubators of culture and as an important tool to recruit and train younger talent. Collaboration and innovation cannot take place remotely or over conference calls and some companies are already observing a decline in these areas amongst their employees. As time goes on, we think the loss of innovation and collaboration will become even more apparent and companies will shift emphasis back to having employees in the office. However, until a vaccine is discovered and widely available, it is likely that companies will need to have portions of their employees working remotely as they simply don't have enough space currently to accommodate them all.
As Kingston notes, most of its tenants are starting to experience issues with remote work. Because of that, it doesn't seem like this will be a permanent trend for most employees.
Employers aren't the only ones in favor of in-person work. Following a trial run, a recent survey from the Gensler Research Institute found that only 12% of U.S. office workers want to work from home, up from 10% before the pandemic. Further, 70% want to come into the office five days a week rather than working remotely for some of the time.
Because of these factors, "in the long run … we do not think remote working represents a threat to the office as we know it," wrote Kingston. Instead, Brookfield believes that the pandemic might turn into a long-term positive demand driver for office space. Kingston continued: "Concerns around social distancing and density ratios are very likely to drive additional office demand in the future and may prove to reverse the trend of increased densification we have witnessed over the past 20 years." That's because instead of packing in office workers, companies might need to spread them out more, which could reduce the transmission of other illnesses like colds and the flu and improve office productivity.