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Nevada Gov. Joe Lombardo might have been riding the crest of a trend when he recently directed state agencies to develop a plan for employees “to return to pre-pandemic, normal and customary office conditions,” by July 1.
“Starting at the next fiscal year, we expect everyone to be working back at normal hours in a physical office,” Lombardo’s Chief of Staff Ben Kieckhefer was quoted in the Las Vegas Review-Journal.
It was welcome news to Par Tolles of Reno’s Tolles Development Co., and other business leaders who have built a company culture dependent on personal interaction.
"Listen, I'm an in-the-office guy, old school all day long," Tolles told host Sam Shad during a Nevada Newsmakers interview Jan. 11.
The trend seems to be nationwide. In August, Apple told employees they must return to the office at least three days a week to restore "in-person collaboration," CEO Tim Cook told Business Insider.
Disney executives want employees to return to the office four days a week and Goldman Sachs wants employees to return to the office five days a week, according to the Insider.
Tolles said "I love it," when asked about Lombardo's mandate. He would like other business leaders to also advocate for the return to pre-pandemic office conditions.
"Some of these leaders, governors, Jamie Dimon of JP Morgan, they need to lead by example and just start saying, 'You will come back to the office. It is part of who we are. It is part of our culture and it is not a choice,'" Tolles said.
Dimon has already pushed back on remote working, telling Yahoo Finance that working remotely didn't work for an apprenticeship program or "spontaneous stuff."
About half of JP Morgan's employees were asked to return to the office five days a week while about 40 percent were asked to come back in a few days a week, according to the Insider.
Tolles, however, has noticed a new trend of where offices are located.
"I think there is a shift toward suburban offices," he said. "If you and I had this conversation five years ago, the central business districts in the major cities were the place to be. That has shifted during the pandemic and now you are seeing suburban offices being more in vogue."
The Damonte Ranch area in Reno and the Summerlin area of Las Vegas were mentioned as suburban office areas.
"I think there is more of a future now in suburban offices than CBDs and things will continue to shift and move," Tolles said. "I don't think high-rise office buildings are gone forever, I mean, they are such a part of our human experience."
He sees a future where office space is converted to other uses.
"Eighty percent of the office stock in the U.S. was built in the 1980s or before," Tolles said. "There is going to be a transformation on what those buildings are used for."
Tolles does not see the demand for office space shrinking in Reno.
"We have not lost anybody in our portfolio," he said. "We have what they call a suburban-style portfolio in downtown Reno and we have tenants who are expanding, not retracting.
"And I would say all through COVID, there was still a pretty active environment in our office spaces because Reno and I would say Las Vegas, too, just didn't have the same crowded experience that other (cities) like Portland, Seattle, San Francisco, L.A., have. But that being said, tech is leading the way in shedding office (use)."
He noted that a hybrid work schedule is also being implemented in large urban areas.
"New York metro is cutting down their subway use on Mondays and Fridays because it seems to be the two days now where people are allowed to work from home," he said. "And I think that is pretty ubiquitous among some of the larger cities."
Business hotels are popping up across the Reno/Sparks area, even though their rates exceed room rates at casino-resort properties.
Tolles Development has built a Courtyard by Marriott across from the home of the Reno Aces baseball team in downtown Reno and plans a similar project in south Reno.
Mike Pegram, the principal of a group that owns the Tamarack Casino in south Reno, also plans to build a 128-room Residence Inn by Marriott by the Tamarack and a similar business hotel at the Carson Valley Inn in Minden.
The business hotels of Hyatt, Hilton and Marriott all have strong reward or points programs for travelers. The strength of those programs is driving the development of business hotels, Tolles said.
The points programs also make business hotels an excellent investment for developers, Tolles added.
"It is not our core business but I understand this business very well and Marriott, Hilton and Hyatt have the most robust point programs ... and the travelers who use those hotels are absolutely focused on points," Tolles said. "So we buy the reservations system and it is the safest bet and the lowest risk bet when developing a hospitality product."
Business hotels lack the excitement of a major Nevada resort but have advantages business travelers appreciate, Tolles said.
"From my own experience, I have traveled to Las Vegas a lot and stayed in most of the hotels there," he said. "And it is exciting going to Las Vegas and staying in a casino because it is fun. But when you have to walk the distance you have to walk from the reservation desk to your hotel room, where you have to walk through the smoke, it just becomes less convenient on a business trip.
"You really do pivot back to these smaller, 130- to 170-room hotels where I can be in my room very quickly and know exactly what I am going to get. I can get to my car in five minutes and the business traveler appreciates that very much.
"And I would say the family who may not be comfortable with the gaming orientation, they will come to a Hyatt or a Marriott, particularly like the one we're building at a shopping center, where we have a movie theater and a number of restaurants. It's just a fabulous place to locate a hotel."