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Connecticut Cities Continue to Thrive Amid Remote Work Trend

Though many businesses continue to allow remote work options, a number of companies have recently established headquarters in the state. Many expect the hybrid work week will give employees the best of both worlds.

(TNS) — From the outside, the office buildings of Connecticut look like they did at the start of 2020. But their interiors, and life in the streets around them, reveal the impact of the global upheaval of the past 20 months.

Today, most office buildings have fewer people working in them than they did before the start of the COVID-19 pandemic because many workers are coming in less frequently or not working at all in their offices. The trend is unlikely to vanish in the next few years — or possibly ever — because many companies have realized that their employees do not need to work in their offices every day.

They have also discovered that flexible work arrangements are crucial to hiring and keeping workers.

The impact of companies' plans for office-based professionals will reverberate throughout Connecticut's economy. Since the start of the pandemic, commercial-building owners and neighboring small businesses have acutely felt the plunge in office activity — and the total volume of new leases is still down in Fairfield County.

But a number of companies' recent decisions to open new headquarters in Connecticut show that the rise of remote working has not erased the state's longstanding status as a major corporate destination. And experts say cities will not lose their appeal as cultural hubs and gathering places even as the ranks of office commuters thin.

"We've shifted to a new societal way of working globally that has to have a greater level of flexibility and trust." said Rebecca Corbin, founder and CEO of Corbin Advisors, a Farmington-based research and advisory firm focused on the capital markets that opened new offices last year. "I'm very much open to working from home."

But Corbin added, " I also believe that there is an important element of separation of work and home. That does come from getting in your car and driving to work and having a workday and then getting in your car or on the [mass] transportation and having your home life."

No Drop in Productivity

On March 6, 2020, Connecticut recorded its first COVID-19 case. In the following weeks, office buildings emptied out across the state as companies directed their employees to work from home as the virus spread relentlessly during its first wave.

While the transition to remote working was precipitous, many businesses navigated the change with relatively little disruption to their operations.

"We all went home, and everything worked somewhat seamlessly," said Lucy Gilson, associate dean of faculty and outreach in the University of Connecticut's School of Business. "One, we knew the people on our teams. For virtual work to be successful, it's actually very important that we have some level of familiarity with the people we work with."

Video-conferencing services such as Zoom, Microsoft Teams, Google Meet, Amazon Chime and Apple FaceTime have played a crucial role in keeping professionals connected.

"We've done [remote working] in the past, even before the pandemic, so we don't feel that separation if someone is in the office or at home," said Sunil Reddy, CEO of Norwalk-based Criterion, a provider of HR-focused software. "We use all the collaboration tools and technology. With all of that, we really haven't seen any productivity differences."

Some companies have kept their offices open since the start of the pandemic through government designations as essential businesses.

"With our culture and setup, I think a lot of people work great collaboratively when they're together," said Greg Cohen, president of New Haven-based The Star Supply Co., which describes itself as New England's largest single-location HVAC and refrigeration distributor. "We've shown over the past 18 months that we're able to do that safely."

Little Pushback for Vaccine Mandates

Connecticut's high vaccination rate and relatively low COVID-19 infection levels have led many companies to reopen offices in recent months — and many workers seem willing.

In October, as the Delta variant subsided, the daily number of COVID-19-related hospitalizations in the state ended at 190 and never exceeded 250, after a summertime high of 391 on Aug. 24.

"I really have had no one in recent weeks express concerns about the way their employer was requiring a return to work," said state Sen. Julie Kushner, D- Danbury, co-chairwoman of the state legislature's Labor and Public Employees Committee. "A lot of people are going back to work."

And Connecticut has seen limited resistance to company-issued vaccine mandates put in place to support office reopenings. "It has not been as controversial as I think one might have expected." Kushner said.

Many employers have reopened their offices in part because they have discovered that there are limits to all-virtual workplaces.

"Virtual teams do really well with routine tasks," said UConn's Gilson. "But where we struggle more in virtual teams is when work becomes complex or when it comes to more innovation and creativity. What we're finding is that we've done really well — with people saying, 'We've been really efficient, but have we really innovated?' And the answer is probably not as much as we would have had we been face-to-face."

Taking a similar view, Corbin Advisors opened new offices in Farmington in October 2020, covering about 7,800 square feet — more than four times the size of its previous offices in the same town. The firm employs approximately 50.

Permanent Change

But office life in 2021 is hardly a doppelganger of the pre-pandemic era. A large number of offices have been reconfigured with more spacious layouts that allow for physical distancing. At the same time, widespread acceptance of remote working means that coming into the office every day is not necessarily expected or demanded, even at companies like Corbin Advisors that have resumed in-person working.

"We have moved to and embraced at least two days in the office, with Wednesday being our 'Corbin Connection' day," Corbin said. "If you want to come into the office and have that social element, Wednesday would be the day."

Criterion reopened its offices at the Merritt 7 complex in Norwalk this past summer, but it did not require employees to return.

"As long as it works for all parties — the employees, the company and the clients — then it doesn't matter where our employees work," Reddy said.

A number of Connecticut-headquartered Fortune 500 firms have taken a similar approach. Stamford-based Synchrony, the country's largest provider of private-label and store-brand credit cards, started its office reopening in June. In October 2020, it announced a policy allowing employees to permanently work from home.

"I don't think things will ever go completely remote," said Synchrony CEO and President Brian Doubles. "There are certainly certain activities that are better in person. And there are certain meetings and things that I think will remain virtual."

The role of remote work has also become a key consideration in hiring decisions.

"I do get some concerned that we might not be able to attract some top talent if we don't adapt to some of these new trends, with remote work being one of them," said Star Supply's Cohen. "It's something we're constantly looking at."

A Slow Recovery

To meet their long-term goals, commercial-building owners and many other businesses are counting on a rebound in office occupancy.

Leasing activity rises and falls sharply from one quarter to the next, driven by big deals. Fairfield County recorded about 432,000 square feet of new leases and expansion deals during the third quarter of this year — a 27 percent improvement from the previous quarter, according to commercial real estate firm CBRE.

But the third-quarter leasing volume trailed the county's five-year quarterly average by 18 percent.

Overall, CBRE data show a significant decline in leasing activity in 2019, followed by a pandemic-sparked drop in 2020. This year is on track to surpass last year but fall well short of the 2015-19 average, depending on the leases in the fourth quarter.

The county's office availability rate, space not leased, has ticked up by a couple of percentage points since the start of the pandemic, but it has remained under 30 percent, according to several brokerages' data. The relative stability reflects the prevalence of long-term leases.

Despite the disruption of the past 20 months, the office market's long-term prospects are brightening. For one, the influx of new residents from New York City and other areas since the start of the pandemic appears to be helping the state to recruit major companies.

During a two-week span in June, tobacco giant Philip Morris International announced that it would relocate its headquarters from Manhattan to a to-be-determined location in the state; manufacturer and technology-services provider ITT disclosed that it would move its main offices from White Plains, N.Y., to Stamford; financial-technology firm iCapital Network said it would open offices in Greenwich; and real estate-focused fintech provider Tomo Networks announced growth plans for its headquarters in Stamford.

Those four firms are expected to cumulatively bring several hundred jobs to the state.

"You've got access to some of the best talent in the world right here," Gov. Ned Lamont said last month at the Greenwich Economic Forum. "I think post-COVID, people sort of like the Connecticut lifestyle... We have a lot of folks moving to Connecticut right now."

'We Believe in the Future of Cities'

What would it mean for the life of cities, if the number of office workers on a given day were to remain flat, long-term? Many urban planners are not alarmed.

"People will commute less because they have to and more because they want to. Workers and companies are still going to want a central meeting place," said Chris Jones, senior research fellow at the Regional Plan Association, a nonprofit focused on economic health, environmental resilience and quality of life in the New York metropolitan region.

"They're going to want to be in places where they can reach as many workers as possible. They also need to be places where people want to come because they're attractive for activities such as going out to lunch or having a drink after work."

Dining establishments are among the small businesses that are hoping for a revival in daytime office-worker populations.

Before the pandemic, said Dani Corbett, general manager of Tigin Irish Pub on Bedford Street in downtown Stamford, "In general there was lunch and happy hour business that we counted on Monday through Friday. During the holiday season, we did a fair amount of office parties as well."

Tigin has not seen that business rebound since the reopening, Corbett said. "Recently, I've noticed some of it coming back — co-workers coming to lunch or meeting after work. I would like to think that if people return to their offices we would see an uptick in business in the same areas that we had before."

As it did before the pandemic, Connecticut's ability to add and keep office-based professionals in its cities in the coming years will depend heavily on how local and state officials respond to longstanding concerns such as housing affordability, the quality of public schools, perceptions of crime and aging mass-transit infrastructure.

"The overarching point is we believe in the future of cities," said Melissa Kaplan-Macey, the Regional Plan Association's Connecticut director and vice president of state programs. "There's not a question that cities will continue to be important hubs of activity in the state, region and country."

(c)2021 The Advocate (Stamford, Conn.) Distributed by Tribune Content Agency, LLC.

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