Two of every five City of San Diego employees in certain departments could work remotely for years into the future, sharply reducing the amount of downtown office space needed by the city, a new report has found.
The 40-page analysis, released late Friday by Mayor Todd Gloria’s office, also said the number of desks and offices required to conduct the public’s business would decline under a “seat-sharing” arrangement that has employees coming into City Hall as little as one day per week.
“In consideration of potential remote and hybrid workplace strategies, the city has ample office space downtown from which to consider alternatives, including divestiture, consolidation, relocation of additional employees to downtown and reimagined uses of space,” the study concluded.
The report, issued at the city’s request by the Chicago real estate analytics firm JLL, will be presented to the City Council on Monday. It is posted on the council agenda as an informational item, meaning no action is requested by the Mayor’s Office.
The analysis did not say how much money taxpayers might save if San Diego’s elected leaders embrace the notion of allowing downtown employees to permanently work remotely or on a hybrid basis.
But the savings would be significant, the study said, and even higher if the practice was implemented outside downtown.
“Additional opportunities to implement workplace strategy change may exist outside of downtown, which could result in further cost savings, consolidation or swing space to accommodate other actions,” the report said.
JLL looked specifically at four buildings owned or leased-to-own by the city that house about 1,750 workers: City Hall, the operations building, Civic Center Plaza and the former Sempra Energy headquarters at 101 Ash St.
It also examined space leased by the city at three locations on nearby B Street that hold about 650 employees.
The study comes as the market for office space has plummeted due to the COVID-19 pandemic, which was formally declared by public health officials two years ago last Friday and resulted in millions of employees shifting to a home-based work schedule.
The review also comes as the city continues to grapple with the leased-to-own 19-story Ash Street property, which cannot be safely occupied due to asbestos and other issues.
The 20-year lease-purchase deal has cost the city more than $60 million to date and spawned a series of lawsuits alleging fraud and other causes of action. It also is the subject of an ongoing criminal investigation by District Attorney Summer Stephan.
While the Mayor’s Office and City Attorney Mara Elliott have been engaged in mediation proceedings, it remains unclear if the cases will settle out of court and if the city still needs the building.
The JLL report said more analysis is needed before policymakers could decide whether to try to retain the Ash Street property or other real estate assets now controlled by the city.
“(The) city has the opportunity to control the development of the Civic Center Core, including adjacent properties,” the study said.
Analysts looked specifically at the city’s downtown core, both the buildings owned by the city government and the leased office space.
The report broke city departments into three categories: “anchor” departments that are not conducive to remote work; “moderately mobile” departments whose employees could work offsite; and “highly mobilized” departments whose workers could basically be based anywhere.
Up to 40 percent of the “highly mobilized” department employees could work as little as one day a week onsite, the report said.
Another 45 percent of those could spend three days a week at the office and just 15 percent would return onsite full-time, reducing by half the number of office seats the city would need, the study said.
One in five “moderately mobile” department workers could work remotely, and 45 percent of others would be hybrid workers, the JLL study said, lowering the office space needs for those workers by one-third.
The study said almost two-thirds of all workers — 63 percent — want to keep their options open when it comes to working remotely rather than in an office setting.
Almost half of all employers have not completed a “future of work” analysis for their own companies, JLL said.
The study also noted that the city emerged from a financial scandal beginning in 2003, when San Diego was dubbed “Enron By The Sea” for its questionable financial practices.
It also cited a series of recommendations issued last year by the City Auditor’s Office, which found serious flaws in the city’s handling of its real estate.
Last year, Gloria agreed to implement the auditor’s recommendation and reorganized the real estate office, which was rebranded as the Department of Real Estate and Airport Management, or DREAM.
“Now the city is a model often (cited) as good governance over financial disclosure,” JLL said.
The report ends with a “next steps” section that calls for city officials to collect more information before developing a longer-range plan.
“Implementation will require a deeper level of engagement on real estate and workplace strategy opportunities,” analysts wrote.
The Mayor’s Office did not say how much the study cost.