PropTech Challenge and Yacht Party, Nov. 29th | NYC REAL ESTATE TECH WEEK →

The Changing Role of Office Janitorial Services Post-Pandemic

When workers began returning to offices as the pandemic began to ease, office cleanliness was the top priority for landlords and tenants. Sanitizing every square inch of the workplace became critical in reassuring office workers that they would be safe at the office. Cleaning protocols were beamed to workers’ phones, posted on social media accounts, and displayed around office buildings. New tech was rolled out promising a touchless experience and self-cleaning fixtures—the world seemed to revolve around the annihilation of germs at all costs. Now, with the pandemic in the rearview mirror, cleaning services in offices have more or less gone back to normal. But it is still a hugely important part of an office building, and any commercial building, to have janitorial services, and while an array of factors like an ongoing labor shortage and landlords looking to cut costs has put this important component of property management on the backburner, it’s something office owners and managers should still make a top priority.

In June of this year, Rensselaer University in upstate New York sued a cleaning service company after an employee of the company allegedly turned off a freezer during a shift, a move that destroyed more than 20 years’ worth of research worth $1 million, according to the complaint. The university accuses the company in its suit for breach of contract and failing to properly train its employee, and is seeking $1 million in damages. While the particulars of the case and whether the company will be found at fault will have to play out in court, the situation is a stark reminder of the important role cleaning plays in the upkeep of a commercial property. Cleaning has always been a part of property management in commercial buildings but it became the lynchpin of return-to-office efforts earlier on in the pandemic, as worries over spreading the virus were still a major concern–especially inside buildings. 

Nowadays, the focus on more stringent cleaning and sterilizing inside office buildings has waned. But new problems have emerged. The ongoing labor shortage that has impacted scores of industries in the U.S. has affected janitorial and cleaning services as well. Record-high inflation has had an impact on the cost of cleaning supplies, and perhaps most challenging to property owners, many office buildings are still struggling to lease space and bring workers back due to remote work. As a result, more office owners are putting cleaning services on the chopping block. “A lot of landlords are looking to cut costs,” said Tommy Silva, founder and president of Silva Building Specialists, a Houston-based cleaning services company. Silva is seeing a lot of office landlords choosing to go in-house for cleaning, something he said is uncommon in the industry. What’s most common is outside janitorial services companies contracting with building owners in one- to three-year agreements. 

Though it might seem like a good way to cut costs by going in-house with cleaning, that may not necessarily be the case. Cleaning a property is an essential part of the upkeep and maintenance of a property. Regular cleaning of floors, carpets, and offices, and keeping bathrooms supplied with essentials like toilet paper, soap, and paper towels are basics that need to be met in order for a building to function properly. Because of this, having a janitorial services company that is up to date on OSHA regulations, new product technologies, and the latest strategies that minimize the risk of virus spread and bacteria contamination is important. Silva, who recently sent his staff to Ohio for training in new ways to clean, said hiring a company that keeps up with the latest cleaning advances and chemicals and is well-versed on the latest regulations is another advantage to hiring a full-service cleaning company instead of going in-house. While janitorial can be overlooked, “the cleaning of a major facility is often the third-largest cost related to an asset,” according to Silva.

New technology that promises more efficient and less costly cleaning is changing the industry. Fogging machines can clean rooms and bathrooms without requiring someone to wipe every surface down while still eliminating bacteria. Auto scrubbers and battery-powered floor cleaners promise a faster way to clean that eliminates the need for lugging around dirty water in a bucket. And even QR codes are being used by janitorial services companies as a way to quickly tell workers details about when an area has been cleaned and share checklists of what chemicals and equipment should be used in certain areas.  

While a lot of companies lost business during the height of the pandemic when offices closed and cleaning services were no longer needed, Silva has been more fortunate. His company’s business is predominately with municipalities, where it services city-owned property like courthouses, administrative offices, jails, and libraries—buildings that have mostly stayed open throughout the global health crisis. But a lot of cleaning companies were not that fortunate. The ones that survived the pandemic are now faced with labor costs that are often twice what they were pre-pandemic. 

For many of the lowest-paid workers in the U.S., wages grew considerably since the pandemic began. An analysis from the Economic Policy Institute found that between 2019 and 2022, income for the lowest-paid workers grew 9 percent, representing the fastest wage growth for that income bracket in 40 years. The rise of delivery services like Instacart and DoorDash, as well as rideshare services like Uber that offered better hourly pay has forced a lot of companies to pay workers more in order to retain staff. When companies choose to go in-house with workers they already have on staff instead of a cleaning services vendor, they may not realize there are hidden costs associated with it. Things like workers’ compensation rates could change, average expenditures on payroll, taxes, and insurance could end up higher, as well as vacation pay. “Cleaning costs can change tremendously before they know it,” Silva said.

But there are advantages to bringing a cleaning service in-house. In the country’s largest office market, one real estate firm that chose to go in-house in cleaning its office buildings is finding that it has, in fact, cut costs. “People in my position are finding ways to not cut costs on labor but other areas, and keep the labor force where they are,” said Adam Rugovac, tenant coordinator at JEMB Realty, a New York City-based commercial real estate firm. Rugovac runs a portfolio of five office buildings for JEMB, and during the height of the pandemic when a lot of tenants were requesting to leave leases early or not pay rent, owners were looking to cut costs. Instead of outsourcing to a cleaning company, Rugovac suggested JEMB use the staff they have, reducing the cost of work like painting, shampooing carpets, and changing ceiling tiles, things that vendors typically took care of but that cost more money. “It was easier and less expensive to do it in-house,” Rugovac said, pointing to additional vendor costs like insurance, delivery fees, and overhead.

Even after workers began returning to the office, JEMB has continued to do its cleaning in-house. “COVID changed our industry,” Rugovac said, pointing to the shift to remote work that has made it hard for owners to lease space in a lot of buildings, leading to a lot of vacant space. The pandemic also changed the way buildings are cleaned. “We made improvements, we now use equipment we never used before,” he said. But even though there are tech advances in the industry and new ways of doing things, some things will never change about the cleaning of buildings. “Even though there are less people in the office, that square footage didn’t change,” Rugovac said. “There might be less garbage but you still have to clean every surface.”

Despite lower office occupancy numbers since the pandemic, regular cleaning of office buildings is still one of the most important components of property upkeep for building owners. Without regular cleaning, properties can deteriorate faster and could lead to unhealthy environments. Many owners are looking in-house as a way to cut costs during this tough time for the office market, and while some are finding success in doing so, others may find it makes more sense to hire an outside janitorial services company. New products and technologies are helping companies and their workers get work done faster, which is helping bring down labor costs. Overall costs for cleaning can certainly vary depending on the market, and so can the needs of a specific property depending on size and layout. Cleaning may not always get the most attention in discussions of the office sector, but as the experience of the pandemic and the current landscape has shown, it’s an issue that deserves more recognition.

Image - Design