Scott Salmirs has a unique view of the RTO tug of war between workers and bosses that has taken over American offices over the past few years. For 22 years, Salmirs has served as the CEO of ABM Industries, a company that maintains work spaces for more than half the companies on the Fortune 500.
While it seems like the RTO battles have reached a plateau, with companies settling into a hybrid detente, Salmirs says the fight isn’t over; many CEOs are secretly hoping to add on another day to two of in-person work to employee schedules. That’s particularly true now that the labor market has shifted power away from workers, and back into the hands of bosses.
“This return to office, it’s still happening, absolutely. I think with this economic climate, we’ll really see what companies are thinking,” Salmirs tells Fortune.
But there are a few key changes that businesses are making to their offices as they try to lure workers back, says Salmirs. Many large companies are cutting headcount and streamline operations; as a result, they’re trading in more outdated buildings for smaller, higher-quality spaces in centralized locations as a way to attract workers. They’re also ditching their open-plan offices and adding more private spaces to make the space “more hospitable,” he says. And of course, bosses are making sure that the pantries are fully stocked with snacks.
“They’re looking closely at pantries and what they’re serving, including the coffee, the snacks, all that good stuff,” he says. “It really matters to employees.”
Fortune sat down with Salmirs to discuss the future of office space and what workers can expect going forward.
Fortune: What kinds of trends are you seeing when it comes to RTO?
Salmirs: There’s been this commercial real estate crisis, if you will, about people not coming to work, and what’s going to happen with office buildings. Predominantly Class A buildings have been really resilient. As people are coming back, the benchmark now is a solid three to four days per week. Over the last 18 months, it’s been more and more.
But the little-known fact about this more difficult time that we’re having right now economically, is that it gives management teams the ability, especially with the hiring market not being great, to ask workers to come back into the office more. Four years ago there was no way that a management team could tell people they’re coming back. they’ll just go get another job. Not so much now.
What does the future of RTO look like?
I think with this economic climate, we’ll really see what companies are thinking. It’ll be an incremental “one more day.” So if you’re at three, it’s going to be four, if you’re at four it could be five. This will be, in my mind, over the next six to nine months.
We were promised an office apocalypse a few years ago, when people were saying that corporate real estate would be empty. What are you seeing in the market right now?
We classify real estate into three buckets, class A, class B and class C. Class A is the good buildings, the ones with really good amenities, and those are doing great. I mean the leasing rates are off the hook, the occupancy rate is like 95%. It’s the B and C class spaces that are struggling a lot more.
Say you have 20,000 square feet, and are in a class B building, paying $50 a square foot for rent. Now with not as many people coming in, you can pay $100 a foot for a 10,000 square foot building with top amenities in the best location because they know that if you want to get your people back to the office, you’ve got to give them good space.
What are you seeing as the top priorities for companies right now when it comes to office space?
I think it’s how they organize the space, because now that more people are coming back, there’s usually a shortage of private spaces. People used to want this big open plan where everyone was sitting at long desks. To get people back, companies are realizing that they have to give people some more privacy. So we’re seeing them convert open space into conference rooms, or areas with more secluded space.
Also, they’re looking closely at pantries and what they’re serving, including the coffee, the snacks, all that good stuff. It really matters to employees.
Since COVID, companies are also prioritizing clean spaces. We’re seeing a lot of [companies] making sure that they could say to employees that their workspace is healthy and clean. Some clients are moving some of our cleaning people on to the day staff, so they’re more visible, so people can see them cleaning and walking around the office.
The most important thing is to really pay attention to people’s work habits. Are they working in groups collaboratively? Is it solo work? Are they on the phone a lot? Are they on video a lot? What we always say to our clients is that you really have to start with understanding the culture of the organization and the different use cases.
