Philly offices may never be the same again as the coronavirus pandemic boosts technology disruption

Mark Silow sat in a near-empty office on the 21st floor of 2000 Market Street, wondering whether he spends too much on rent.

Silow, the chairman of Fox Rothschild, was one of four people on his floor Tuesday after the law firm let nearly 2,000 lawyers and staff members across the country work remotely. With the exception of some “skeleton staff,” the firm’s 27 offices were largely empty during the coronavirus outbreak. But everyone was still working.

“You say to yourself, ‘Gee, do I really need to spend the rent on 20,000 square feet on this floor?” Silow said.

The coronavirus pandemic has forced businesses in Philadelphia to make changes to their operations to help stop the spread of the new coronavirus. For many companies, this is the first time they’ve let employees work from home en masse. For others, the outbreak has accelerated existing trends in technology, from eateries offering online delivery to studios releasing new movies for streaming.

As the business disruption persists, there’s a growing sense that when the pandemic ends, some changes could endure. Policies and technology used out of necessity now could become permanent later, if businesses and consumers find they’re convenient, efficient, and productive.

“The silver lining could be the technology breakthrough," said Robert Li, a professor at Temple University and director of its U.S.-Asia Center for Tourism & Hospitality. “When a crisis like this happens, it is most certainly tragic, but it may also feed new opportunities.”

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He noted that the 2003 SARS outbreak helped fuel China’s e-commerce growth as consumers unwilling to leave their homes shopped online instead. Alibaba, the Chinese web retail giant, reportedly saw its business grow 50% that year. The epidemic is what inspired JD.com, now one of China’s largest online retailers, to sell products on the internet.

The current pandemic could be a defining moment for remote work. In Philadelphia, some of the city’s biggest employers, including Comcast, Independence Blue Cross, and the University of Pennsylvania, have thousands of employees working from home. Gov. Tom Wolf ordered all nonessential businesses to close their doors.

If successful, companies could decide they don’t need as many employees on site and downsize office space to cut costs, causing a ripple effect that could harm commercial real estate and even restaurants, observers said.

“Now that people are forced and have an excuse to do it, I think a lot of people are going to intentionally use this as a means of justifying further remote work," said John Cardone, a Philadelphia brand and innovation consultant

Independence, one of the largest health insurers in the region, was among the first in the area to send workers home as the new coronavirus spread. The company stress-tested systems in early March and required all associates in the region to work remotely last week. On Tuesday, Independence had roughly 4,500 people working off site.

The remote work has gone well so far, though Independence had minor issues and made adjustments, said Mike Vennera, Independence’s chief information officer. Workers had to adjust, too. During large conference calls, it’s hard to use social cues like raising hands to speak. So the insurer has put a moderator in charge who can mute speakers if too many talk at once, Vennera said.

“Seeing it work for real, you obviously will iron out certain kinks,” Vennera said. “I think the other important thing we’re looking for out of this, above and beyond the technology, just how does the workforce perform?”

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Ryan Vogel, a human resource management professor at Temple, researched remote work at a large company and found employees’ engagement and productivity was about the same at home as in the office. Stress was considerably higher at home, though, as it’s hard for employees to “separate home from work,” he said. Still, he expects companies to realize the benefits of remote work during the pandemic.

“This is a trial period where we are forced into it," Vogel said. “And I think managers will realize the cost savings associated with it are great."

Unsurprisingly, those in the commercial real estate industry disagree. Jeffrey Tertel, executive managing director at Newmark Knight Frank’s Philadelphia office, said he expects people to flock back to the traditional office after the pandemic, seeking personal interaction with colleagues after weeks of isolation.

“It is extra resources and time and money to create for these people to work from home because they can’t share resources at home and they don’t have collaboration," he added.

Remote work is hardly the only business disruption to come from coronavirus. States and cities have banned large gatherings and “nonessential retail," devastating the tourism and hospitality industries. Pennsylvania is requiring all businesses not considered “life-sustaining” to close.

With movie theaters shuttered, Comcast’s Universal Pictures is making movies available at home the same day they hit theaters. Starting with the April 10 release of Trolls World Tour, the studio will also make movies currently in theaters — such as The Hunt, The Invisible Man, and Emma — available for on-demand rental. The move breaks the longtime practice of waiting 90 days between a movie’s release in theaters before it’s available at home.

The company said the decision was a response to the coronavirus outbreak, but it further disrupts a movie theater industry that has been dragged down by the growth of online streaming services, such as Netflix and Amazon Prime Video. Comcast is planning to release its own streaming service, called Peacock, in April.

“NBCUniversal will continue to evaluate the environment as conditions evolve and will determine the best distribution strategy in each market when the current unique situation changes,” the company said in a statement.

Eateries also are evolving. Food delivery services Grubhub, DoorDash, and Caviar are offering “no-contact” delivery, in which drivers leave orders in a safe spot for customer to grab. And in Philadelphia, the Center City Taiwanese eatery Baology launched its own meal delivery service Wednesday that lets customers order food from its menu and those of other women-led restaurants in Philly, said owner Judy Ni.

For restaurants, the current disruption could mean that a strong digital presence is not just a good option, but a matter of survival.

Ben Fileccia, of the Pennsylvania Restaurant & Lodging Association, said he had expected eateries that weren’t doing delivery and take out before to start now due to the pandemic.

“And that’s been the case in some respects,” he said. “However, there are a lot of restaurant groups that have made the decision to just shut down completely.”