Recently we considered what the future of the residential market may be, given the various Covid related (and non-Covid related) factors currently affecting the property market.
On various news sites in recent days, there has been speculation about the future of the “office” as a physical entity. Particularly in the light of changing work behaviour and business demands during and in the post pandemic environment.
Is working from home here to stay?
There are myriad questions that need to be considered before one can come to any conclusions about what is likely to happen with the vast amount of office space that exists in the UK. The biggest question is about the move to home working that was forced on practically everyone at the height of the pandemic. Many employees have found that the work/family mix works a lot better when there is not a three hour commute everyday. You save money, hassle and recover valuable hours that can be better spent with your family or having a glass of wine in the garden (obviously not first thing in the morning!).
How much resistance there is going to be from employees to returning to the office when all controls over Covid movements and social gathering numbers are finally lifted? On top of that, many employers are looking very hard at their overheads and coming to the conclusion that rent and service charges for offices are something they would very much like to reduce. The forced switch to home working has basically resulted in a decades worth of changes in attitudes to the employment model being condensed into little more than twelve months. What is permanent and what is temporary in terms of those changes?
Serviced offices & shared work spaces
For some involved in the provision of office space, Covid-19 has been a blessing. Those who provide serviced office space or shared working spaces have seen demand rocket. Flexibility is now the key factor as we move forward. Employees may be happy with going into the office a couple of days a week but many will want a much bigger slice of the ‘work from home’ pie on a permanent basis.
Some employers are and will move away from vast offices in cities like London, Manchester or Glasgow and look at establishing regional offices or work spaces for meetings/work days in smaller towns etc that employees can use on a ‘need to’ basis rather than having to go all the way up to the City of London etc. What is worth noting from the experience of the pandemic, is that a lot of the huge tower block offices in major cities were unfit for purpose when social distancing rules were enforced. It would have taken hours to get everyone in and then the same at the end of the day, due to lift capacity, shared facilities and working space density.
So, what it the future?
At rhw we believe we won’t see the end of the office overall. What we think will happen is that office space will become more diffused in how it is located and smaller in terms of capacity. If businesses can share space they will look at that. We also suspect the traditional lease is going to find itself under enormous pressure as tenants look for more flexibility, reduced long term commitment and better terms from landlords.
There will be excess office space in a lot of locations which will never be filled again, particularly outside prime locations for business. Even in the West End of London or the City there is going to have to be a rethink about the future use of some locations that have been traditionally considered office use areas. The answer may well not be redevelopment into flats and apartments either, given the push from property owners to go where they can access green space and gardens.
We are witnessing one of the greatest social and employment upheavals in recent generations. Where we all sit and work once the dust has settled post Covid is going to be very interesting.