COVID-19 and office optimism Why there’s life in the office yet, but not as we now know it
Introduction Further to our series of articles in relation to the future of office space and whether the office will survive the great working from home experiment, we’d like to bring you the latest insights into the future of the office and why we feel there is reason to be optimistic.
In June, the Office for National Statistics published the results of a survey regarding where people were working throughout lockdown1. What it revealed is that the proportion of working adults travelling to work has, of course, increased since midMay, from 44% to 49%, in line with easing lockdown measures. Meanwhile, the proportion of people working exclusively from home dropped from 38% in mid-June to 29% at the end of June.
49% of working adults now travelling to work
29% of working adults are working exclusively from home
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The proportion of working adults travelling to work increased to 49% from 44% in the previous week, while the proportion working exclusively from home dropped to 29% Proportion of adults, Great Britain, 20 March to 28 June 2020
100
%
90 80 70 60 50 40 30 20 10 0 20-30 March
3-13 April
17-27 April
14-17 May
28-31 May
11 to 14 June
25 to 28 June
Worked from home exclusively Travelled to work Visited a park or public green space Avoided physical contact with older or vulnerable adults
Whilst the ONS only started recording whether people were working from home from the middle of May, the 9% increase in people returning to the workplace is an interesting one – not just because of lockdown easing, but because it clearly indicates that the workplace, or more specifically the office, still very much has a role to play. And this is backed up by our own research2 conducted as lockdown has eased, which has revealed that there is indeed, reason for office optimism.
1
ONS data published 24 June 2020
2
Total survey responses 150
The 9% increase in people returning to the workplace is an interesting one.�
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What do businesses want? With more than half of the respondents we spoke to already returning to the workplace, we asked for some insights into what the future holds for them and what some of the key challenges that they face are. Over half of respondents expect between 30-70% to work from home long term.�
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When asked what proportion of staff businesses expect to work from home in the longer term 30% said they anticipate this ranging between 30-50%, closely followed by 50-70% (26%).
Over half of respondents expect between 30-70% to work from home long term.
That means that over half (56%) of respondents expect between 30-70% of staff work from home in the longer term, which tallies with our research on future office space requirements.
Whilst nearly a quarter of people who responded to our polls (23%) believe that between 10-30% of their staff will continue to work from home, nearly a third (29%) expect to maintain the same level of office space when they next move premises.
Meanwhile, 67% of people who responded to our property poll expect to decrease the size of their office premises when they next have the opportunity to move, which on the face of it, sounds negative. However, it’s not necessarily bad news. It simply reinforces what we have been thinking and saying to clients, in that COVID-19 has accelerated in weeks, the trends that would normally have taken years to play out.
Regional markets like the south east, Solent or Midlands will not see as much of a reduction in office space as, say, London which is experiencing an exodus of businesses out of the city into the regions surrounding it.
So, there’s life in the office yet.
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All rise the regional hub As we recently discussed in Property Week, if we assume that a hub and spoke strategy is adopted by businesses, as we expect to be the case, then many larger companies will retain a smaller office base in London and set up smaller regional satellite offices. This will allow them to be closer to staff working remotely, enabling their people to access the office more easily from time to time. Guy Parkes, partner and south east office agency expert based at our Reading office, commented: “We expect to see a blend of working practices moving forwards and we are exploring property strategies involving larger hubs in regional ‘capitals’, with smaller meeting hubs in towns no more than 45 minutes from clients’ main administrative centres or the place they wish to retain a presence in.” We are already seeing spikes in such activity across Surrey and the Thames Valley, where businesses are making the move out of London, attracted by the amenities on offer, as well as the transport connectivity and financial benefits.
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We expect to see a blend of working practices moving forwards and we are exploring property strategies involving larger hubs in regional ‘capitals’.” Guy Parkes, partner and south east office agency
What does the future hold? A client of ours recently surveyed 900 staff and asked if they would like to continue homeworking as well as having the option to come into the office – 85% said yes to that kind of blended work style.
With this in mind, not everyone will congregate at the office at the same time, potentially transforming the traditional 9.00-5.00 work culture altogether – and our general lifestyle and purchasing habits with it. We expect working practices to evolve to become even more flexible, with a blend of working practices in place. There would be less peak time congestion in town centres and on our motorways. There would be less purchases of coffee before 9.00am on the way to work, fewer purchase spikes at lunchtime, less town centre trade generally, with fewer visitors if some 30-40% of people were working from home at any one time.
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Sociocultural impact And let’s not forget the social benefits of the office environment, recently extolled by author Simon Sinek, in a recent social media post where he said: People are tribal animals, we are social animals, we need human interaction and at the end of the day although we can be functional and get things done, it’s very hard to have any kind of brainstorming or creativity. We need to be in the company of others, we need to be able to interrupt each other and write things on walls and have that wonderful magical energy and then go for lunch together to build a relationship.”
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This last point around collaboration and innovation is an important one, particularly for businesses operating in the creative, digital or tech industries, like Twitter, who recently reported that staff could work from home ‘forever’. What they meant by this was not, ‘this is how it is going to be from now on’. Rather, it is about having the option, the flexibility to work in new ways. Businesses like those operating in the creative sector will still benefit from a more collaborative working environment and will still need their people to connect regularly with their peers. Partner, David Thomas, added: “As inherently social creatures we will still want to meet and interact with colleagues, but this may become at a blend of venues locally and centrally, with offices designed more like meeting places, with more experiential and unique features to attract people in.”
What should the workplace look like? The large single occupancy 100,000 sq ft corporate HQ may not necessarily be dead, but we will certainly see diminished demand for this sort of space. In the last 10 years across the Thames Valley, there have only been 15 new lettings of space greater than 80,000 sq ft. That’s an average of 1.5 of these lettings in any one year and in 2012 and 2014 there were none. Those aren’t great odds and with space requirements falling, the odds are only going to get longer. We expect to see the development of more business clusters rather than use classes, where likeminded businesses in similar fields will congregate together. As a result, the evolution of serviced offices is likely to become more sector specific, with Lifesciences buildings, ITC buildings, Marketing buildings and so on, each attracting complimentary workforces. Landlords may seek to design more multi-let office environments which are amenity rich in a way that the home office isn’t, attracting businesses on much more flexible terms, whilst encouraging staff to connect with peers and meet / collaborate with clients.
Our research suggests that landlords are doing an excellent job of managing COVID-19 risk, with just 2% of people citing lack of clarity around COVID-risk as a business challenge. However, risk in a multi-let space is a substantial area of concern for businesses as they seek to re-open (31%), as is lack of social distance space (38%). On the flip side, just 8% of respondents expect to increase their office space at the next available opportunity. Perhaps this is why just over one fifth of people surveyed expect 70% or more of their people to work from home in the longer term. What is clear is that landlords will need to resize and repurpose space to offer more flexible terms and a multi-let environment, evolving their marketing strategies to suit.
Should we design and build, not less office space, but smaller, highly flexible and high-quality space in the brave new post-COVID-19 world? And should developers put their plans for large statement buildings on hold, or at least adapt them for multiple occupancy? In short, we believe the answer is yes.
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Office design is integral The question of how multi-lets are designed and will be designed in the future, is an integral one. Partner, Alexandra Finlayson said: “From a property asset management perspective, we are already seeing tenants require smaller spaces from our landlords, on far more flexible terms. Meanwhile our landlord clients are experiencing increased needs from tenants in relation to shared communal spaces which, whilst aiding collaboration and community / vibrancy, pose a potential risk.” This is resulting in more calls for alternative access to spaces, as opposed to floors that can be reached only via lifts, where visitors may need/want to access via stairs. When it comes to facilities and toilets, tenants may well want these demised so they have control, or designed as single cubicles including sinks with floor to ceiling partitioning, with the option of opening windows for ventilation.
We are already seeing tenants require smaller spaces from our landlords, on far more flexible terms.” Alexandra Finlayson, Partner
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There is also more concern around open office environments in general, so it is possible that we will see a return back the closed office environment, or the design of more office pods on flexible terms in the future. As ever, we will continue to monitor this trend as it evolves, but as for whether there is life in the office yet - absolutely, and it’s an exciting time to create some unique new spaces for this brave new world. To discuss any of the issues covered in this article, whether landlord or tenant, don’t hesitate to get in touch.
Key contacts Birmingham
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Carole Taylor Partner Acquisition and disposal T: +44 (0)7717 814835 E: ctaylor@vailwilliams.com
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Steve New Partner Acquisition and disposal T: +44 (0)7874 902123 E: snew@vailwilliams.com
Thames Valley Richard Dawtrey Partner Investment T: +44 (0)7881 588526 E: rdawtrey@vailwilliams.com
Occupier Advice David Thomas Partner T: +44 (0)7815 071882 E: dthomas@vailwilliams.com
Guy Parkes Partner Acquisition and disposal T: +44 (0)7788 188874 E: gparkes@vailwilliams.com
Property Asset Management Alexandra Finlayson Partner T: +44 (0)7768 724339 E: afinlayson@vailwilliams.com
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