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Back to office? Hybrid? Colorado Springs businesses deal with lasting impact of pandemic

More than four years after the start of the COVID-19 pandemic turned the traditional office environment upside down, some companies are simply done with the whole out-of-the-office thing.

Amid a mandate for social distancing, most office employees were sent home to work during the early days of the pandemic. And for many, that remote work remains the norm, at least for part of the workweek.

Amazon CEO Andy Jassy, though, announced in September that employees will be required to switch from a three-day-in-office schedule to five days per week. Florida-based defense contractor L3 Harris, a major employer in Colorado Springs, required its employees nationwide to work in the office starting Sept. 16. Other big companies, including Boeing and UPS, have mandated a return to the office.

In the Springs, though, several employers continue to offer work-from-home options and even are opting to sell their properties as they downsize their offices because they continue to offer remote work opportunities. Others have worked to make the office environment more inviting to lure back employees.

Insurance giant Progressive has put office complexes in Colorado Springs and three other cities up for sale — with plans to lease back some of the space — because most of its employees choose to work from their homes, Progressive spokesman Jeff Sibel said via email. The company plans to “continue to maintain a presence in Colorado Springs” even if the local property is sold, he said.

Other Colorado Springs area employers have called workers back to the office and are hanging onto their real estate, though some workers continue on a hybrid schedule with both office and remote work. A study completed late last year for the Downtown Partnership of Colorado Springs, using cellphone location data, found the downtown office population is down about 16% from pre-pandemic levels in 2019.

102724-biz-bluestaq 2.jpg
102724-biz-bluestaq 2.jpg

Downtown Partnership CEO Susan Edmondson estimates about 26,000 people work downtown, but “that doesn’t mean they are all downtown every day (because of hybrid work schedules). As leases come up for renewal, I expect we will see some reduction in downtown office footprint as more employers go remote.” She expects that to be largely the case in other areas of the city as remote work grows across the nation and worldwide.

Edmondson does expect the number of downtown workers to expand as more employers move downtown, but she doesn’t expect that population to rebound to 2019 levels anytime soon. Downtown Colorado Springs, however, has recovered to a greater extent than other major cities, she noted; that includes downtown Denver, where just 55% of workers have returned to work in the office compared with pre-pandemic levels. The national average is 70%.

Employers are reacting to the trend in different ways. Some are configuring their offices like work hotels, where employees who do want to work in the office don’t have an assigned desk or cubicle but instead can find an empty desk, plug their laptop into the company’s network and begin working, said Alex Dumas, a commercial real estate broker specializing in office space.

A hybrid schedule remains the norm for many office workers. A report from real estate consultant JLL said more than 80% of companies ranked by Fortune magazine as the nation’s 100 largest allow hybrid work schedules, with employees working an average of three days a week in the office. The JLL report said 11% of Fortune 100 employers require all workers in the office five days a week.

Reasons for demanding a full-time return to the office are many. In announcing Amazon’s back-to-the-office policy, Jassy said: “We’ve observed that it’s easier for our teammates to learn, model, practice, and strengthen our culture; collaborating, brainstorming, and inventing are simpler and more effective; teaching and learning from one another are more seamless; and, teams tend to be better connected to one another.”

Those companies mandating a full return to the office may pay a price, though. A working paper from Austin Wright, a University of Chicago assistant professor, estimated that 28% of all U.S. companies and 75% of technology companies operated with a fully remote workforce or had a voluntary in-office option. Wright’s research found that mandates for employees to return to the office “drive employees away, with senior employees leaving at the highest rates,” likely reducing output, productivity, innovation and competitiveness.

Job-posting data compiled by the Colorado Springs Chamber of Commerce & EDC shows that the percentage of remote work jobs posted by local employers has increased every year since the start of the pandemic, jumping from 1.3% of all posted jobs in 2019 to 7.4% through the first nine months of this year.

Colorado Springs has attracted more remote workers — who can work from anywhere — because of its high national ranking as a desirable place to live, said Tim Vanderhoof, the chamber’s vice president of economic development. However, he said employers expanding in Colorado Springs are still leasing or building facilities — nearly two-thirds of those who have announced expansion plans during the last two years plan a local facility.

“That would suggest that those companies are not working remotely, at least not entirely,” he said. “A lot of them are defense contractors and they have to be onsite due to the classified work they are doing.”

Progressive hired commercial real estate agency CBRE in July to sell office buildings totaling 1.8 million square feet, including the company’s former headquarters in Mayfield Village, Ohio, and its 328,000-square-foot campus in the Northgate area of Colorado Springs. A marketing brochure for the Springs campus indicates Progressive is “prepared to enter into a long-term sale leaseback for the North Building,” one of three interconnected structures.

Progressive Insurance will sell its office complex in northern Colorado Springs because many employees work from home; the company plans to lease back some of the space. (photos by Jerilee Bennett, The Gazette)
Progressive Insurance will sell its office complex in northern Colorado Springs because many employees work from home; the company plans to lease back some of the space. (photos by Jerilee Bennett, The Gazette)

Progressive offers “flexible work options for many of our employees,” Sibel said, “with most people choosing to work from their homes. Due to this, after conducting a comprehensive market analysis of our real estate, in April we announced we would begin marketing efforts” to sell or lease buildings in the four metro areas. The company operates a call center, data center and information technology operation in Colorado Springs with more than 1,800 employees.

Progressive built the Springs campus in 2003 and sold off its data center in 2021 for $38.5 million to a Utah company that specializes in operating such centers. Sibel said at the time of the sale that the company no longer needed the entire center, which houses servers and other computer equipment that operate the company’s websites, store customer and corporate information and process transactions.

Progressive is the largest example of Colorado Springs employers shedding space as more employees work from home.

A recent CBRE report found the amount of occupied office space citywide last year fell by 154,000 square feet and vacancies spiked above 9% as tenants didn’t renew expiring leases on space they no longer needed.

Financial services giant USAA allows employees to work in the office, remotely or on a hybrid schedule, with most office-based employees spending four days a week there. The nonprofit employs 2,000 people in Colorado Springs, with most working in its 371,000-square-foot regional office in the north side Briargate area. The company is looking to hire more employees — it currently has 50 openings — to fill unused space in the complex, said Andrew Femath, a spokesman in USAA’s San Antonio, Texas, headquarters.

Christian ministry Compassion International employees work a hybrid schedule, with 176 employees working at least three days a week in its Northgate area offices and 400 working remotely, ministry spokesman Larry Lincoln said via email. The ministry focuses on “optimizing where and when staff perform their best while equipping them with the tools and spaces to maximize their productivity in a global environment.”

Colorado Springs-based Compassion owns more than 400,000 square feet of office, warehouse and chapel space on 75 acres, including an office building acquired from a legal publishing company for $15.76 million in 2012. The ministry has no plans to reduce its facilities footprint and instead uses its buildings as “a gathering center for our employees to come together for community and engagement,” Lincoln said.

Quantum Metric, a Springs-based technology company, will face a decision in about 1½ years on whether to renew leases on office space in Colorado Springs and Denver, said Mario Ciabarra, the company’s founder and CEO. The company employs 400 people worldwide but nearly all of them work remotely, so only a handful work onsite in offices that can accommodate up to 100 people.

“We have launched the most new products in the history of the company, and that speaks to the ability of our produce development team to work remotely. We have no intent to require people in the future to work in the office,” Ciabarra said. “What we decided to do with the money we invested in offices was to instead get together for events, such as lunch, dinner or an outing that creates more value for our team members.”

Defense contractor Bluestaq and Christian ministry Focus on the Family, both based in Colorado Springs, have returned all workers to the office, but each still give employees the option of working from home a day or two a week, depending on their assignments and schedules.

“We pride ourselves in building state-of-the-art software solutions and building the best team in the state. The ability to work and collaborate with each is critical. If we are not collaborating in the office, we are not building best-in-class solutions,” said Bluestaq CEO Seth Harvey. “We will continue to work from the office to build our culture and camaraderie as we build the best possible team. When employees are not in the office, they function as individuals” and not as a team.

The company has video games, a foosball table, an outdoor patio and shuffleboard and basketball courts in its office to make it more attractive to its 140 employees and the 80 it plans to hire during the next year, Harvey said. Bluestaq hosts barbecues, ice cream socials, an Octoberfest celebration and frequent meals to give its employee teams opportunities to build camaraderie, he said.

Focus on the Family allows non-management employees to work a hybrid schedule with one or two days a week at home, and about 10% of its 650-person workforce participate in the program, which began early last year. During the pandemic, the ministry also converted unused space into a staff center that offers free refreshments, and Focus also upgraded its fitness center; both are popular additions, said Joel Vaughan, the ministry’s chief of staff.

Talitha Hoover of Colorado Springs defense contractor Bluestaq lifts weights in a gym that serves as an amenity for company employees. (photos by Jerilee Bennett, The Gazette)
Talitha Hoover of Colorado Springs defense contractor Bluestaq lifts weights in a gym that serves as an amenity for company employees. (photos by Jerilee Bennett, The Gazette)
Bluestaq employees enjoy their large patio last week. (Jerilee Bennett, The Gazette)
Bluestaq employees enjoy their large patio last week. (Jerilee Bennett, The Gazette)
Not far from their work stations, employees at defense contractor Bluestaq have an option of a large Connect Four game or a video game. (Jerilee Bennett, The Gazette)
Not far from their work stations, employees at defense contractor Bluestaq have an option of a large Connect Four game or a video game. (Jerilee Bennett, The Gazette)
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