One of the nation's biggest insurance companies is joining the growing ranks of firms calling employees back to the office, even though it's still actively listing its Los Angeles headquarters for sublease.
Farmers Insurance wants most workers to return to the physical office three days a week, according to a Wall Street Journal report. The change in Farmers' remote work policy comes after multiple big tech and other firms have called employees back to offices. Farmers didn't respond to emailed requests to comment.
Meanwhile, the company is still marketing for sublease its roughly 513,000-square-foot headquarters at 6301 and 6303 Owensmouth Ave. in the Los Angeles neighborhood of Woodland Hills, according to CoStar data. A representative for JLL, which is marketing the space for sublease, declined to comment to CoStar News. The sublease space is being offered through Jan. 31, 2027, according to marketing materials.
The seemingly push-pull moves surrounding its office use symbolize where some companies find themselves more than three years after the pandemic sent workers home and opened a debate about ways to work. The slowing economy of the past year, along with higher interest rates to bring down inflation, has some companies trying to cut real estate costs and lay off workers or bringing more staff into the office to seek to boost teamwork.
It will take years for companies to sort out where and exactly how they'll be working, said Ryan Patap, senior director of market analytics in CoStar Group's Los Angeles office.
"This is all a trial-and-error period right now," Patap said. "We're still in this discovery phase of how we're going to use office space."
'Underutilized Real Estate'
Farmers put the space up for sublease in January 2022. Farmers also at the time was looking to put up for sublease other offices around the nation as it reduced its real estate needs.
The company occupies roughly 10 million square feet of space in the United States, according to CoStar data. Farmers had more than 1,900 employees working in Southern California as of January 2022. In total, the company has more than 20,000 employees, according to its website.
"Since the beginning of the pandemic, when we transitioned 98% of our workforce to working remotely, we've seen our teams consistently demonstrate effectiveness in serving our customers, and we've listened as many have told us they appreciate working with increased flexibility," Farmers representative Trevor Chapman told CoStar News in January 2022. "This shift has resulted in underutilized real estate, leading to our plans to reduce that footprint."
The Farmers headquarters is in the Woodlands Hills-Warner Center office market, where it accounts for roughly 5% of the market's space. Further, Farmers putting its headquarters up for sublease was among the largest blocks of sublease space offered in Los Angeles since the pandemic started.
Greater Los Angeles companies currently are marketing a record-setting 12.1 million square feet for sublease, according to CoStar data. That sublease figure has increased 22% year over year.
The Woodland Hills-Warner Center office market has a 19.7% vacancy rate, higher than the greater Los Angeles average of 14.9%, according to CoStar data. The market's average rent is $32.98 per square foot, which is below the greater L.A. average of $42.29 per square foot.