As you may have guessed, 2020 hasn’t been the best year for makers of office furniture. With some employers now cautiously returning portions of their workforce to the office, the furniture suppliers who want to help them navigate the evolving look of the workplace are largely still waiting for those orders to start coming in.
That’s placed companies like Herman Miller in a sort of awkward holding pattern. The famed maker of the ubiquitous Aeron chair saw enough of a surge in home office orders to exceed earnings expectations and boost their stock price, but the relative uptick of new corporate orders in August and September hasn’t pushed the company back into its pre-pandemic position.
In order to meet a new type of demand, however, Herman Miller has to invest time and money into figuring out what the office of the future looks like, at a time when the Wall Street Journal reports the company’s net sales declined to $626.8 million for the quarter ending August 29. Still, the hope is that this and other office furniture makers will be able to tap into pent-up demand once companies are ready—it’s just a matter of when that happens. “Companies are still trying to figure out what the office will look like in the future,” Gregory Burns, senior research analyst for Sidoti & Co., told the Journal. “Once they make that decision, that will be the trigger for them to make adjustments to their office space.”
The decisions these companies make will not universally favor makers of office furniture, however. An Association of International Certified Professional Accounts survey cited by the Journal suggests that only half of business executives expect to return most or all of their operations onsite within the next 12 months. About 31% said their company would function either primarily or entirely remotely during that period.
O ther forecasts are even more dire. A recent study by commercial real estate services firm Cushman & Wakefield posits that there will be 95 million fewer square feet of in-use office space by the third quarter of 2021, about 10 million more than what was observed in the wake of the 2008 financial crisis. The firm also predicts that it could take until 2025 for office occupancy rates to return to their pre-coronavirus levels. The share of Americans and Europeans permanently working from home could also hit 10 to 11% by the time things settle down again, with about half of the workforce functioning in a hybrid remote versus onsite capacity.
While the fact that home office furniture remains hard to find suggests continued high demand in the category, it’s entirely possible that could dissipate once most remote workers and students are settled into their new routines. Whether or not companies will be ready to start redesigning their workplaces for a “new normal” by that point will go a long way toward determining the fate of the office furniture market.