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REI plans sale of unused eight-acre headquarters campus as the retailer embraces remote work

Company is abandoning its headquarters even before employees move in. It had planned to occupy the space starting this summer.

A rendering of REI's new headquarters in Bellevue, Wash. (NBBJ)

Outdoor retailer REI Co-op said Wednesday it plans to sell its newly finished corporate campus in Bellevue, Wash., another sign of how quickly the coronavirus pandemic is accelerating the shift to remote work and prompting a major impact on commercial real estate.

The retailer, which announced it was building the outdoor-friendly campus in 2016 and began construction in 2018, said in a statement that its headquarters would ultimately be made up of multiple “satellite” locations across the Seattle area and that it would “lean into remote working as an engrained, supported and normalized model” that could also allow employees to work outside the region.

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“The dramatic events of 2020 have challenged us to reexamine and rethink every aspect of our business and many of the assumptions of the past. That includes where and how we work,” REI President and CEO Eric Artz said in a video call with employees, according to a company statement.

Employees who would have worked at the campus, which media reports had called the “most outdoorsy HQ ever” and “like summer camp for grown-ups” for its rooftop terraces, courtyard full of native plants and large sliding doors to the outside, had not yet taken occupancy. Like many office-based employees, they began working from home in March and had been expected to move midsummer.

Some commercial real estate investors say other companies could follow suit as employers grow comfortable with employee productivity and the ability to collaborate while working from home, all while allowing major cost savings.

“The owners of big corporate buildings are really starting to see that their employees really don’t want to come to work in the office anymore,” said Rick Mirza, a commercial real estate investor and CEO of Daulat, a private-equity firm. “That feeling that we work somewhere, and it’s this whole big-tribe mentality — [some are] realizing that’s not that necessary."

Ben Steele, REI’s chief customer officer, said in an interview that the original idea for the new campus was to focus on collaboration, but “if I look at what we’ve seen and learned in the four years since, [it’s that] collaboration can happen in a lot of ways and doesn’t necessarily require a single location.”

REI is structured as a member-owned cooperative and releases financial data on an annual basis.

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Steele would not share specifics on the price that REI sought for the wholly owned land and buildings but said it expected to see a return on the investment.

In the statement, REI said the sale would have financial benefits such as investing in new customer innovations — Steele pointed to investments in its curbside service or online business — as well as reducing its carbon footprint and supporting nonprofit partners.

This year REI temporarily closed all of its stores and took several cash-saving measures, including executive pay cuts and unpaid furloughs for the majority of its retail and field employees. The company has also moved to reduce head count at its headquarters, by cutting 25 percent of positions, some of which were unfilled. In May, REI said it was expecting to be down about 30 percent in 2020 revenue.

While the company has brought back 95 percent of its store employees from furlough, and Artz said in Wednesday’s statement that REI was outperforming its initial revenue expectations for 2020, he also said in a letter to employees that “these dollars would also play an important role in stabilizing our business through the ongoing impacts of current disruptions.”

“The pandemic is far from over,” he added, “and it’s important and prudent that we make sure the co-op is prepared for the near-certainty of additional disruptions ahead.”

In the letter, Artz said that while remote work would become a more embraced, more “normalized” way of working for headquarters employees, REI was actively working to find two satellite locations in the Seattle area and extend a lease on one existing location. For now, he wrote, REI expects most headquarters employees to work from home for the rest of this year and into 2021, and would make working from locations beyond Seattle more feasible “in the months and years ahead.”

“If you’re like me, you miss the sense of community. You miss hallway conversations. You miss in-person work-sessions,” Artz wrote. But “this year has shown us our home is not a building. Our home is wherever we find ourselves doing our best work, pursuing our outdoor passions, serving our communities.”