Learning lessons from COVID-19 mandated teleworking, Los Angeles County is undertaking an initiative to cut its office space needs by 10% over the next four years.
In a letter to the Board of Supervisors that’s posted on the county website, Acting CEO Fesia Davenport said the county expects to save roughly $9.8 million in the short term by terminating leases for 99,000 square feet of space and not moving forward to lease another 135,000 square feet of originally anticipated need.
“The focus is not a budget curtailment exercise, but rather an opportunity for departments to reconsider their office space needs based on the experiences gained through the pandemic, including teleworking and the use of new technology, contemporary work place practices, and an increased focus on long-term sustainability issues,” Davenport wrote.
The county operates and maintains roughly 4,000 facilities and owns 45 million square feet of buildings — from fire stations and jails to large hospital complexes and museums, according to information on the county website dated 2017.
A calculation as to how much of that 45 million square feet is owned or leased office space was not immediately available. However, the county’s real estate footprint is likely to be a meaningful percentage of the total 209 million square feet of commercial office space available countywide.
Many county departments are still evaluating opportunities to optimize office space, which Davenport said could result in significant savings.
In addition to promoting teleworking, solutions could include “hoteling” spaces to be used by multiple employees and co-locating departments that offer linked services.
As part of the restructuring of its real estate portfolio, a task force working on the problem determined that it would seek to locate offices in proximity to underserved communities as well as to transit hubs. It also said that as it considers future facilities, it would identify emerging areas that offer lower building or rental costs or that could appeal to groups of county employees who live in outlying areas of the county.
As for the broader market, in a July report on leasing for the second quarter, Coldwell Banker Real Estate noted that leasing activity was at its lowest level since the Great Recession. The report forecast continuing rental rate and occupancy declines with a recovery by the end of 2021.
While some trends point to less demand for space, some companies who call their employees back from work-at-home situations may find that the need for social distancing at least temporarily increases the need for more square footage.
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