Done Working From Home? Prepare for More Hot Desks

Sarah Vanunu started a new job three weeks ago at MyHeritage, an online genealogy platform based in Or Yehuda, Israel, and thanks to Israel’s speedy vaccine rollout, she has been eligible for in-person work since she began. But she only goes in on Mondays and Wednesdays and leaves nothing on her assigned desk in between, since different people work there the other days of the week.

“It’s so funny to start a new job and not meet everyone up front,” she says. “I still don’t know half of my colleagues.”

MyHeritage, which employs about 400 people in Israel, is still operating at reduced capacity due to Covid restrictions. Ms. Vanunu, who directs the company’s public relations, comes to work with just a laptop and mouse. There’s a completely clean desk waiting for her there, with nothing on it but a monitor. If she wants to come in any other days, she must make a reservation online and get assigned to a random desk elsewhere.

As millions of workers head back to the office this summer, many will return without a desk of their own. Some appreciate the flexibility of these hot-desk arrangements, which aren’t completely new but have become vastly more popular as part of post-pandemic plans for hybrid work.

But hot desks also mean extra time spent managing reservations, coordinating with teams and helping employees feel a sense of belonging without a dedicated spot for them in the office. Experts and workers say there are ways to optimize these spaces, including assigning desks to groups instead of individuals, planning schedules, designating areas for socializing and being extra-mindful of workers with special needs or disabilities.

A major reason desk reservations are a big part of so many companies’ return to work is that most workers haven’t yet been ordered to come in five days a week, so their schedules remain variable. And many offices are reopening at lower than maximum capacity. JPMorgan Chase CEO Jamie Dimon wrote in his annual shareholder letter in April that the bank may need only 60 seats for every 100 employees after the pandemic.

“You have to have most employees coming in nearly every day to justify assigning them a desk,” says Amy Yin, San Francisco-based founder of OfficeTogether, an office reservation and scheduling software company.

Some companies also want to avoid assigning desks so they can clean them more frequently as part of enhanced pandemic-era hygiene protocols.

The key concept emerging around desk-reservation systems is “neighbourhoods,” where certain teams can gather a few days a week, as opposed to individual workers reserving their own desks and coming in willy-nilly.

MyHeritage, which opened for in-person work in April, designated one or two specific weekdays for each team, such as research and development or product, says the company’s facilities manager, Katerina Breitman.

The most popular day for in-person work at the moment is Thursday, according to data compiled in May from about 10,000 offices around the world by Robin, a workplace management platform. (The least popular is Friday.)

Flexible work arrangements are likely here to stay: In one 2020 survey of 77 firms worldwide by CBRE Research, 56% of those surveyed anticipated more use of flexible office space.

Social interaction may be one of the trickiest parts of these arrangements in the long run, since workers can no longer drop by the permanent desk of a colleague for unplanned chitchat. A 2018 survey by Workthere, a co-working space company, found that only 46% of workers surveyed felt that they were more productive in a hot-desk environment compared with having their own desk.

One workaround is to designate areas just for socializing. The Austin, Texas, office of the consulting firm Bain & Co., which reopened in May in a WeWork, has a “bullpen” area, an open space with larger tables that can seat about 25 people, to facilitate water-cooler moments, says Peter Bowen, a partner there.

Live feeds can also help workers keep track of each other, says Zach Dunn, Boston-based co-founder of Robin. “At the beginning of the year, [our software] basically showed desks and seat assignments, but now it’s a map updated in real-time as people move through the office.”

Over time, companies have gotten better at the extra layer of planning required to work in an office that accommodates fewer people in more locales. In Austin, Bain asks employees to indicate on a mobile app which days they plan to come in the following week. If many people plan to come on a particular day, they might allot the morning to a certain team and the afternoon to a different one.

OfficeTogether allows booking up to 30 days in advance, but Ms. Yin says most companies tend to book about two weeks out.

Workers with disabilities, as well as workers who are used to having specific accommodations at their workstations, may find it harder to adjust to hot-desking.

It’s important to design such offices so that they are accessible from the outset, says Deborah Foster, a professor at Cardiff Business School in Wales who studies diversity in the workplace. “Ensuring that the layout is wheelchair-accessible and putting sensory markers on floors to guide people with sight impairments are two considerations,” she says. Also important: proper lighting and ensuring that there are quiet spaces for workers who need to use assistive technologies like voice-recognition software.

For workers who can’t be accommodated in the short-term, employers should be more flexible about allowing them to continue working from home, Dr. Foster says.

One final thing that workers may miss with hot desks is the chance to spruce up their workspaces with personal memorabilia.

Mr. Bowen, at Bain, used to keep all kinds of tchotchkes at his old desk in Chicago: photos, a binder of 20 years’ worth of company presentations, a trophy from his company golf tournament. He will eventually go back there to retrieve his mementos, but no longer feels he needs to have them at his desk for colleagues to see. Instead, he’ll just store them at his new home in Texas.

“The rise of the home office has kind of created a second place for all that stuff,” he says.

Retailers are making modest predictions about the holiday shopping season—and their stocks are going gangbusters in response.

Victoria’s Secret, Foot Locker, Ulta Beauty and Dollar Tree are among the companies that offered somewhat mixed assessments of the state of the shopper last week. Yet each received an ovation from investors.

Traders have piled into stocks en masse since a softer-than-expected inflation reading on Nov. 14 bolstered wagers that the Federal Reserve is done raising interest rates and is poised to cool the economy without tipping it into a recession. Treasury yields have sharply declined as well, giving equities a second wind.

The S&P 500 has risen 4.1% since the report, extending its gains for the year to almost 20%.

Many depressed sectors of the market, such as retailers, have risen even faster. The SPDR S&P Retail exchange-traded fund—which includes 78 retailers, from department stores and other apparel companies, to automotive and drugstores—has jumped about 13%. Victoria’s Secret has soared 52%, Foot Locker is up 50%, Ulta has risen 21% and Dollar Tree has added 12%. (Three of the four stocks have suffered double-digit percentage declines this year.)

Americans slowed their spending in October, according to last week’s consumer-spending data from the Commerce Department. But the early readings from the holiday shopping season have been more encouraging. U.S. shoppers spent $38 billion during the five days from Thanksgiving through the following Monday, up 7.8% from the same period last year, according to Adobe Analytics.

Many investors closely watch consumer spending because it is a major driver of economic growth. If spending is too strong, the Fed could be forced to raise interest rates again. Whereas, if spending is too weak, it could be a sign that the economy is entering a recession.

In the coming days, investors will look at U.S. service-sector activity for November and Friday’s monthly jobs report as they try to assess the strength of the economy and the market’s trajectory.

“The consumer has been resilient throughout it all,” said Jay Woods, chief global strategist at Freedom Capital Markets. “The economic news is now starting to back that up, that, ‘OK, we aren’t going to be in a recession. Things are getting a little bit better.’ And these stocks that had been beaten-down are finally catching a bid.”

Victoria’s Secret posted its second consecutive quarterly loss Wednesday, with the lingerie retailer facing a continued slump in sales. But the company forecast higher sales in the current quarter, sending shares up 14% the next day, their largest one-day percentage gain in more than two years. The stock is down 20% in 2023.

Footwear retailer Foot Locker said Wednesday that Black Friday sales were strong and it forecast an upbeat holiday shopping period, while reporting lower sales and profit for the third quarter. Its shares rose 16% that day, their biggest gain in more than a year, trimming their 2023 decline to 21%.

Cosmetic retailer Ulta on Thursday posted stronger-than-expected sales in the third quarter and raised the lower end of its sales and profit outlook for the year. The shares rose 11% in the following session, their best day since May 2022. They are up 0.6% for the year.

Dollar Tree reported Wednesday that same-store sales growth was weaker than analysts expected, but investors appeared to be encouraged that the discount retailer is seeing increases in customer traffic, even if basket sizes are shrinking. Its shares rose 4.4% that day and are off 11% in 2023.

Another reason why retail stocks have rallied? Warehouses have reduced merchandise, and store shelves aren’t spilling over with discounted goods.

John Augustine, chief investment officer at Huntington Private Bank, said higher interest rates and oil prices made him bearish on retail stocks over the summer. But with an easing macro environment, he believes retailers could be poised to do well.

“It seems like traffic is gonna be there for the holidays,” Augustine said. “Now can retailers make the same profit, earnings per share, with tighter inventory?”

Short sellers are licking their wounds after the recent rally. They lost about $120 million in November betting against the SPDR S&P Retail ETF, according to financial-analytics firm S3 Partners. That compares with a loss of $2.8 million through the first 10 months of the year. Short sellers borrow shares and sell them, expecting to repurchase them at lower prices and collect the difference as profit.

Many retail stocks still generally look cheap compared with the broader market. Victoria’s Secret is trading at 11.8 times its projected earnings over the next 12 months, while Foot Locker is at 16.2. The S&P 500’s multiple is 18.8.

Despite the recent excitement in markets, many investors caution that it is too soon to count on a soft landing for the economy. Jamie Dimon, chief executive of JPMorgan Chase, recently cautioned that inflation could rise further and a recession isn’t off the table.

In the past 11 Fed rate-hiking cycles, recessions have typically started around two years after the Fed begins raising interest rates, according to Deutsche Bank. This hiking cycle started last March.

“It’s not an all-clear resurgence trade that we’re in right now,” said Brock Campbell, head of global research at Newton Investment Management. “This is gonna be a much more idiosyncratic stock picker’s group for a while.”

Done Working From Home? Prepare for More Hot Desks

As employees return to the office, more of them will find that they no longer have an assigned workspace that’s all theirs.

Shares of retailers including Victoria’s Secret and Foot Locker are surging despite mixed holiday updates