Table of Contents
- We asked five CEOs, at companies including Skillshare and Hired, why they decided to get rid of their office space.
- The CEOs said their employees want greater flexibility — and there are better ways to spend money than on rent.
- Some companies are ramping up hiring or giving employees stipends to set up their home offices.
- Visit Business Insider’s homepage for more stories.
Rent is expensive. And potentially unnecessary.
Since March, offices around the world have been eerily silent, as the folks who normally fill them have been isolating from the coronavirus at home. Many employers have responded by cutting their real-estate costs.
A Reuters analysis of quarterly earnings calls during a week in July found that more than 25 large companies intend to downsize their office space in the coming year. Business Insider’s Daniel Geiger reported that a growing number of employers — including Macy’s and Yelp — are subleasing their office space.
Some businesses have decided to pull the plug, trading office space for cyberspace for the foreseeable future. For companies that have been hit hard by the recession, it’s an obvious place to reduce spending — especially if employees have been just as effective out of their boss’ sight.
Business Insider spoke to five CEOs in a range of industries who opted to ditch their offices during the pandemic. We asked them how they arrived at this decision, where they’re saving money, and what kinds of challenges they’ve run into. All these companies have fewer than 200 employees, so the transition to remote work might be easier for them than for large corporations.
Read on for the executives’ insights.
Responses have been edited for length and clarity.
Mehul Patel, CEO of Hired
What the company does: Matches tech talent with top employers
How many people work there: about 100
Where the offices were located: San Francisco (headquarters), New York City, Toronto, and London
When the CEO decided to get rid of the offices: August 2020
How and why the CEO made the decision: Hired sent out an employee survey and found that more than 90% wanted to work fully remotely going forward. At that point, they were approaching the end of their lease and Patel and his leadership team were thinking about whether to terminate the lease or sublet the space.
How the CEO envisions the company’s future office space: Hired will probably rent a smaller office space with conference rooms instead of individual cubicles. That way, teams can convene for meetings every so often. But it’s unlikely that anyone will be expected to come into the office every day.
The financial benefit of going office-less: Hired has invested some of the money they’d typically spend on rent in recruiting, hiring, and growing the business. (Patel said each employee needs at least 200 square feet and office space in San Francisco can run $80 per square foot, which would mean monthly rent is at least $16,000 per month.)
The hardest part of going office-less: “Many people miss the camaraderie that comes with being in an office and seeing your peers and not seeing Brady Bunch cubes on a screen all day. I think that’s harder for people who are naturally extroverted, for instance.”
How the CEO has personally adjusted to working remotely: “The conversations are much more intentional now that you’re setting up a time. Zoom is not a great substitute [for chatting in-person]. I’ve found myself wanting to do phone calls more. Somehow phone calls are feeling more meaningful to me than Zooms.”
Molly George, CEO and founder of Kickstand Communications
What the company does: Provides PR services for tech brands
How many people work there: 17
Where the offices were located: Austin (headquarters) and Boston (office space in a WeWork)
When the CEO decided to get rid of the offices: In May, George and her business partner decided to stop renting space in the Boston WeWork. In August, about a month before their lease in Austin was due to expire, they decided not to renew.
How and why the CEO made the decision: Some employees were already working remotely. Now, it didn’t seem reasonable to send any employees back to the shared office space in Boston. And in Austin, employees told leadership that they didn’t feel comfortable going back to an open-concept office yet.
How the CEO envisions the company’s future office space: George is thinking about building “our own mini-coworking space” with the option for teams to book a shift. Or, it might be a place for individual employees to reserve time for focused work if there are too many distractions at home.
The financial benefit of going office-less: Kickstand is saving upwards of $10,000 every month. That figure includes rent as well as other expenses like parking for the Austin and Boston spaces. Kickstand has reallocated some of those funds toward hiring for new roles.
The hardest part of going office-less: “Our biggest concern was that we have spent several years building a very intentional culture. A lot of that culture centered on getting to see each other in person. How do you preserve that aspect of your culture in a fully remote environment? We’ve rolled out a monthly social stipend to encourage team members to get together one-on-one in a way that feels safe and comfortable. That could be grabbing coffee and meeting at a park. We wanted to try and find ways to encourage people to still build those relationships with their teammates.”
How the CEO has helped the team adjust to working remotely: “We didn’t want to create a scenario where the team felt this pressure of being online and working 100% of the time. We rolled out mental health hours at the start of the pandemic. Every team member can take a handful of hours each week to step away, go for a run, read a book. Some of our team members use them for mental-health services to help them cope with some of the stress.”
What the company does: Connects creatives and professionals with online courses
How many people work there: about 125
Where the offices were located: New York City
When the CEO decided to get rid of the offices: Leadership announced the closure of the NYC office three weeks ago. Their office lease is up in December 2020 and they’ve decided not to look for new space.
How and why the CEO made the decision: In a survey, most employees said they’d prefer to work in a office between one and four days a week. Cooper, along with the executive team, the people operations team, and the chief operations officer, decided it wasn’t worth paying monthly rent if the office would rarely be at full capacity.
How the CEO envisions the company’s future office space: Cooper predicts that Skillshare will partner with a global coworking brand so that employees have the opportunity to work from those spaces. New hires will also receive a stipend to set up their home office.
The financial benefit of going office-less: Now that Skillshare isn’t paying hundreds of thousands in rent every year, it’s redirected some of those funds toward learning and development and to wellbeing programs. Skillshare recently partnered with Gympass, which focuses on physical and mental wellness. The company will also organize two in-person company get-togethers every year (once it’s safe to meet in person).
The surprising benefit of going office-less: The 35 employees who were already working remotely became more effective. Cooper thinks having everyone work remotely may have leveled the playing field.
How the CEO approaches compensation when everyone’s working from different locations: “We decided that for anyone in the US, it’s going to be one compensation scale. Whatever the New York tiers are, we’re going to pay that nationwide. We’re going to hire the best people, no matter where they happen to sit.”
Casey Halloran, CEO and cofounder of Namu Travel
What the company does: Curates experiences for travelers to Central America
How many people work there: 40 (Namu is also starting to bring back some of the 60 or so people who were furloughed during the pandemic)
Where the offices were located: San Jose, Costa Rica
When the CEO decided to get rid of the offices: April 2020
How and why the CEO made the decision: Even before the pandemic, some of the staff had been pushing to work remotely. There’s a lot of traffic in San Jose, so commutes could be harrowing. Namu Travel was due to move offices in April, but Halloran decided against taking on another lease since no one could safely come into the office anyway at that time.
How the CEO envisions the company’s future office space: Halloran expects that Namu Travel will rent a much smaller office and treat it like their own coworking space. Individual employees can reserve a day to work in the office. In the meantime, the company has been renting large Airbnbs with lots of outdoor space in different locations. That way, teams can work together (and social distance from each other) for a week or so at a time.
The financial benefit of going office-less: Namu Travel is saving about $9,500 a month on rent. The company will also save on expenses including utilities, coffee and snacks, and parking.
How the CEO feels about going office-less: “I really miss whiteboarding and brainstorming with creative, high-level thinkers. There’s something about meditating on a problem together in person — it’s different. I miss feeding off the energy of my team.”
Jillian Bridgette Cohen, CEO and cofounder of Virtual Health Partners
What the company does: Offers virtual health and wellness services
How many people work there: 14 full-time, plus 300 consultants around the world
Where the offices were located: New York City
When the CEO decided to get rid of the offices: October 2020
How and why the CEO made the decision: The staff had been remote since March. Cohen soon realized that they couldn’t safely work or get together in a small conference room in their prewar office building.
How the CEO envisions the company’s future office space: Cohen thinks it’s unlikely that Virtual Health Partners will ever be based in an office again. She thinks the company might reserve a large, open space where teams can hold meetings as necessary.
The financial benefit of going office-less: Cohen negotiated with the company’s landlord and was able to break the lease with a fee that is considerably lower than their monthly rent.
The surprising upside of going office-less: “We were so used to popping over and chit-chatting through scenarios. [In terms of] setting up a new customer, we had a process, but every single minuscule step [now] had to have more of a detailed process around it. I actually think it improved our own quality and systems because we did update all of those processes.”