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Aeron office chairs were once a status symbol. Some versions of the sleek, aerodynamic piece cost $1,000 and reveal the sitter to be both important and employed by an important company. But what happens when the Masters of the Universe no longer need to come to the office?
Aeron maker Herman Miller announced last week it would acquire rival Knoll, best known for its modernist tables, for just under $2bn. In hip offices, both brand names are known for stylish products that ooze prestige.
The two companies are running into each other’s arms to head off trouble. Work from home is the present, and hybrid models of working are the future. Even Jamie Dimon, boss of JPMorgan Chase, a typical skyscraper-occupying bank, concedes less space will be needed per worker. They will presumably need less fancy furniture too.
The vacancy rate for Manhattan office space in the first quarter reached 16.3 per cent, the highest number since 1994, according to real estate company, Cushman & Wakefield. The average over the past decade is roughly 10 per cent.
Asking rents have fallen below $73 per square foot, the lowest price in three years. Americans with the luxury of being able to work from home largely enjoy it. More than a quarter of respondents to a Pew Research survey agreed they had adequate workspace. An even higher proportion said they had the appropriate equipment.
Both Herman Miller and Knoll’s pricey offerings skew towards workplaces rather than homes. In 2020, each company’s revenue fell by roughly a tenth. The transaction is premised on $100m of annual cost cuts out of roughly $3bn of combined direct and overhead costs.
Even with a 45 per cent premium, the takeout price for Knoll is at a discount to where the company traded before last March. Herman Miller shares are down a tenth since it announced the acquisition this week.
Yet neither company has been standing still. Each has a slew of brands and have been expanding into retail and direct-to-consumer channels. The pair believe that homes and office buildings will both have to be refashioned for the next phase of work.
Still, it is questionable whether Americans want fancy, modernist furniture in their home Zoom meeting backgrounds. They are less likely to spend as much on furniture and furnishings as finance and law firms do. But perhaps that soft, ergonomic chair can be the one accoutrement worth splurging on.
The Lex team is interested in hearing more from readers. What is your furniture solution to working from home? An antique partners desk supporting an array of trading screens? Or a laptop balanced on an ironing board? Please compare notes in the comments section below.
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