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What's the future of office work in southeastern Connecticut?

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Earlier this month, the global real estate company JLL released survey results showing that among 3,317 people surveyed in 10 countries in March, 63% prefer a hybrid schedule, working three days a week in the office and two days remotely. 

That's the current schedule for most staff at the Chamber of Commerce of Eastern Connecticut, President and CEO Tony Sheridan said.

"There's a real serious discussion. No one has the right answer, as yet, going on about the future of office space. We're having that discussion here," Sheridan said. "Employees have been able to work from home very effectively. How much office space will we need in the future?"

He thinks that most offices the chamber's size, about 10 or 12 employees, are trying to keep everybody happy. Sheridan thinks companies will sort out these issues by the end of summer.

"September is kind of that magic moment, where whatever that new work model is going to be, it will be in effect by September for everybody," said Katie Quackenbush, co-president of the Human Resource Leadership Association of Eastern CT. "Maybe it's already in place, but those who are giving employees a little more time to transition have set September as that magic moment."

Quackenbush said employers are trying to find a balance between getting workers back in the office, where they can collaborate "and have those impromptu water-cooler discussions about a project that's happening," and allowing flexibility for employees who may have kids doing remote learning or caring for older parents.

Quackenbush noted that "different industries are going to have different experiences." For example, industries with direct customer contact — like her industry, banking — are more likely to be back in the office full-time, whereas it's a different situation for industries with a model of customer service over the phone.

Many Connecticut Business & Industry Association members are manufacturers, "and so they kind of never went home," CBIA human resources counsel Diane Mokriski said. But CBIA has been getting a lot of questions from other employers about how to bring people back.

Mokriski thinks a lot of companies are bringing back employees in stages, where a certain percentage come back part-time and then gradually more.

Internally, she said CBIA's policy is to allow employees to work remotely if they discuss it with their supervisor.

Mokriski said she doesn't know of companies in Connecticut that have taken the leap to close their physical building or downsize office space, but employers are talking about that.

Local office market weak even before pandemic

When it comes to the future of the real estate market for office space, southeastern Connecticut is in a different position than cities such as New York and Boston, and local real estate agents and brokers note the local situation wasn't exactly thriving even before the pandemic.

"As a result of the pandemic, it just made a bad situation worse," said John Jensen, managing broker with Pequot Commercial. He said to find a vibrant office market in southeastern Connecticut, one has to go back to the 1980s, before defense subcontractors left for Rhode Island.

Jensen said there's a lot less leasing activity now, and it's for smaller spaces — maybe 500 to 2,000 square feet, not 15,000 or 20,000 square feet. He said the smaller offices include a lot of medical offices, plus some smaller defense subcontractors and tech companies.

"I don't see anything happening with the office market anytime soon," Jensen said. "It's just going to stay the way it is, bouncing along the bottom with vacancies."

He and Paige Bronk, the Town of Groton's economic and community development manager, both noted that Electric Boat is an exception.

"They have a very specialized product and service, and you can't do that from home," Bronk said, adding the same goes for the region's tourism industry.

Bronk doesn't think the region will see a groundswell of professional offices closing. But he also noted "our professional office market prior to the pandemic was pretty weak," and there were already vacancies.

"There isn't a whole lot of room for a downslide," Bronk said.

But he is hopeful for the future of co-working spaces in which individuals and small businesses share office space.

Realtor Lian Obrey owns Shoreline Office Suites in Groton — which provides space for individual entrepreneurs, mobile professionals and small businesses — called that market "completely flat."

"I lost a couple of tenants during the coronavirus, but as far as finding new people, it's just almost impossible. Throughout the area we have lots of office space that is not occupied, nor are there inquiries about it," she said.

She also said that real estate offices are empty now, as agents are doing everything remotely, a trend that started before the pandemic and then increased.

But Obrey is optimistic about Shoreline Office Suites, saying of the market, "I know it's going to come back; I just don't know when."

Connie Howard, commercial Realtor at the New London-based US Properties, said deals fell apart in 2020 but this year "has been busier than we've been in five years." She said most of her showings are to people from New York and Boston, with a lot of people in health care but also financial services and maritime companies.

She said the average space people are leasing or buying is about 2,000 square feet, but new companies coming in are looking for bigger office space of 3,000 to 5,000 square feet.

But she also said a couple buildings US Properties has under contract are office buildings that are going to be turned into apartment buildings.

e.moser@theday.com

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