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As Miamians Go Back To Work, New ‘Digital Nomads’ Are Changing The City’s Economy

Rob Wile and Rebecca San Juan The Miami Herald

WWR Article Summary (tl;dr) When it comes to getting back to the office, Rob Wile and Rebecca San Juan say, "A growing chorus of firms say they are pivoting to a mixed model that allows for personal flexibility among staffers that still lets employers maintain a baseline corporate culture in a physical office environment." This strategy may appeal to a number of new "digital Nomads" who are temporarily calling Miami home.

Miami

If remote working helped usher in Miami's current wave of migrants, what happens now that it's safe to return to work?

After a year away from the office, companies whose business can be conducted with just a phone and computer are working out just how to balance cost, lifestyle and corporate culture variables in the post-pandemic era.

The shakeout could have implications for Miami's entire economy.

"It's the million dollar question," said Philippe Houdard, co-founder and CEO of Pipeline co-working spaces. While much of the U.S. economy was able to successfully pivot away from the office, he said, "it's also been demonstrated that there are real limitations to just working from home."

A growing chorus of firms say they are pivoting to a mixed model that allows for personal flexibility among staffers that still lets employers maintain a baseline corporate culture in a physical office environment.

It's a strategy that could last — especially as Miami also sees an influx of 'digital nomads' now calling the city home but ditching the traditional office model.

"The workplace is moving into a hybrid environment," said Alan Kleber, executive managing director for commercial real estate firm JLL Miami. "Organizations are attempting to create strategies and policies of how work will get done, and that is going to impact [office] buildings."

As a result of the shift, local office vacancies have, for now, tipped upward. In the first quarter of 2021, the Miami office market had a total vacancy of 19%, up from 18% in the fourth quarter 2020, according to the most recent JLL office market reports.

Meanwhile, in this transitional post-pandemic moment, some firms are looking beyond the central business district, with virtually every sub-market in Miami-Dade seeing increased interest.

It all makes for a changing local office landscape that is poised to thrive.

'Distributed' workforce Alex Taub is emblematic of the shift. The founder and CEO of Upstream, a digital professional networking platform that on Wednesday announced it had raised $3.25 million from investors, Taub moved with his family from New York City to Miami in the throes of the pandemic.

He has continued to grow the company remotely, hiring workers both locally and back in New York. But for now, he has declined to purchase office space here. Taub said Upstream's nine employees — only three of whom are in Miami — continue to work efficiently from home.

"We obviously like sitting down and jamming in person, but we are not committed to having a centralized office yet," Taub said. As the rest of the world reopens, he may reconsider — but at the moment, "we don't want to get locked into a lease," he said.

As founder and chairman of real estate group Terranova Corporation, Stephen Bittel has a bird's-eye view. The pandemic, he said, prompted many C-suite executives to move to South Florida. Whereas in the past, that may have signaled retirement or a second home, Bittel now sees permanent moves that will likely entail jobs moving, too.

"I think the next step is office space," Bittel said, "and eventually they would move more and more team members to join them. That's going to drive a population increase that will continue for the coming years." Some local furniture purveyors are already seeing the positive effects of the influx. Brianna Brown, president and designer at Fine-Line Furniture & Accessories in Coral Gables, estimated that up to 70% of her new business is from out-of-towners.

"I think the locals are still struggling a bit with either wanting to go hybrid or in general how they want to transition," she said, "but everyone coming in from other states wants to get set up from the get go."

Yet even new arrivals are pivoting. Harry Hurst, co-founder and co-CEO of Pipe, a financial technology company now worth $2 billion, moved from Los Angeles to Miami last August. Pipe now boasts 30 total full-time employees, about a quarter of whom are in Miami.

Though the firm has leased space in Wynwood, Hurst describes the Pipe office model as "distributed," with no plans to formally centralize its workforce. While Pipe will continue to be a Miami-first company, the model means finding the best talent anywhere in the world and letting them work from wherever they are best able to contribute.

"Pipe will be hiring across all teams," Hurst said in an email. "We hope to expand our workforce in Miami, but Pipe will continue to be a distributed team."

Still at home It is not only startups that are rearranging. Bittel said his properties have seen a variety of new work plans. A call-center lessee, for instance, sent all its employees home as the pandemic bore down and has not returned. Law firms, meanwhile, have seen some employees back to work while giving attorneys the flexibility to stay at home if they must.

"Clearly [there are] office tenants not fully back — buildings are open with limited people, and a lot of businesses learned they can work fine from home," Bittel said.

Patricia Hernandez, founding partner at Avila Rodriguez Hernandez Mena & Garro LLP in Coral Gables, said her firm now gives all employees the option to work from home if they choose — though she found many attorneys missed the camaraderie of the office environment, and that younger lawyers were missing out on mentorship and development opportunities.

"It wasn't an issue of efficiency — it was more an issue of losing teamwork,"

Hernandez said. "People become more isolated at home, and with training, we saw it as a concern that we weren't able to offer to more junior attorneys as much they would have otherwise."

When they do come into the office, their desks have been rearranged to remain socially distanced. The firm also still requires masks if someone is walking around.

The lack of a lockstep march back into the office is reflected in downtown vacancies. Commercial brokerage CBRE says vacancy rates in Miami's central business district increased slightly in the first three months of the year compared with the same period one year ago, from 16.7% to 18.8%, though inventory and class levels have changed over the period. Local tenants say activity on Brickell Avenue appears to remain below pre-pandemic levels.

"We do see that the offices still haven't really opened up," said Abe Ng, founder and CEO of Sushi Maki. He said a wider reopening appears to still be some months off — at a minimum, when schools reopen in August. For now, he said, orders are still coming in strong from dining-room-table diners in Pembroke Pines, Palmetto Bay and Kendall.

"People are still treating themselves to sushi while working from home," he said.

Having gotten used to a bedroom to kitchen table commute, some employees may also now be insisting on avoiding Miami's notorious rush-hour traffic. That could end up impacting salaries, as employers mull changes in how they compensate workers for their commutes or other cost-of-living factors.

"We might be seeing more [human resources] questions brought to the table," said Tere Blanca, founder, chairman and CEO of Blanca Commercial Real Estate.

Sub-market growth Few other cities in the U.S. are experiencing Miami's onslaught of new-to-market tenants. Blanca estimated there is still another one million's square-feet worth of demand among relocating firms.

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