In July, the insurance company Argo Group will move into offices a third of the size of the space it has occupied in the IBC Centre downtown for the past 10 years.
The move comes not as the company looks to downsize its workforce as a result of the changing nature of work as the pandemic wanes.
Argo is moving to Broadway Street, where it will lease 25,000 square feet of office space in The Soto building for its San Antonio workforce of about 150 people.
That’s down from 85,000 square feet of Class A office space Argo had within the downtown business district — not far from where USAA began to develop a large downtown presence before announcing in December it would sublease portions of its space on Convent Street.
But cutting back on office space is not a wholesale market trend, say commercial real estate agents.
“The demise of the office space market is greatly exaggerated,” said Russell Noll, executive managing director at Transwestern, who represents both landlords and tenants. Potential tenants are actively looking for space, but perhaps seeking out different types of office space than before.
“What is working for one company is the polar opposite for another,” Noll said.
“It’s like nothing I’ve seen in my three decades — it’s fascinating.”
Argo began reevaluating its office even before the pandemic began in early 2020. With its lease coming up for renewal, the company started looking at how workers want to use office space, said Susan Comparato, chief administrative officer at Argo.
The process revealed that most people prefer being in the office to collaborate, solve problems and network, but be on their own to get the work done.
Though Argo’s employee numbers have shrunk from the 200 it had in 2016 due to recent divestitures, the company’s leaders say that when the decision was made to relocate, already about half of its remaining workers, in San Antonio and elsewhere in the U.S., were splitting their time between the office and working remotely.
The reason for the move to The Soto came down to efficient use of space, but also recruiting and retention, Comparato said, making it easier for employees to balance their work and personal life.
“The way we looked at it to begin with, before the pandemic, was we wanted to be able to trust our workers and have them work with their managers to figure out a schedule [and] how the individual employee wanted to work,” Comparato said.
The new space at The Soto, the city’s first building to use mass-timber construction, will accommodate that, she said.
Argo employees will be “hoteling” workstations, using an app on their phones to pre-book one of 130 desks for the day, a concept that has grown more popular since the pandemic began. Argo also is implementing the idea in its New York City offices, where Comparato works.
The rest of the space is designed around collaboration with any number of uses, she said. In some cases, Argo teams will plan to spend the same days in the office because they like working together.
In others, a team with individuals assigned to different offices around the country will meet up at the San Antonio office to work out a problem. A very small number of Argo staff work full time in the office, said a spokesman.
As the pandemic subsides, employers are instituting return-to-office plans that range from fully remote to a hybrid situation to all-hands-on-deck. Argo has instead put flexibility to work in other ways that benefit the company.
“There are some organizations who are insisting people come back or come back in a very regulated way,” Comparato said. “We’ve been able to secure talent that is really appreciating the level of flexibility that Argo is embracing.”
Corporate culture is mostly responsible for how businesses are viewing their office space for a post-pandemic world, Noll said.
In November 2020, his company announced it had brokered a full-building lease for real estate firm KW City View to take over The Park at Vance Jackson development, far more than the firm had in their former home at the high-rise City View building.
The new campus provided agents their own “front doors” into an office with access to conference rooms and a 100-seat training facility.
A year ago, the demand for such single-story buildings was high, Noll said. “They like the ability to drive up, walk directly into their space, not being in a high-rise with common areas and elevators.”
But that has diminished in recent months, and because the San Antonio office market is not overbuilt as it is in some parts of the country, including Houston, the local market overall appears to be rebounding, Noll said.
“I just marvel at the resilience of business owners and companies to adapt and change and we’re seeing that,” he said. “People are expressing confidence in their clients and their employees. Companies are making the decision to move forward and do wonderful things.”