Offices of the future are set to change radically. As home working becomes the norm and demand for office space reduces, businesses will be looking to reduce their property portfolios and optimise spaces to suit new working models – a process that could take years. Wayne Butcher examines the changing fortunes of office real estate.
“Change is the only constant”, the ancient adage goes. As the pandemic enters its tenth month, and the UK heads towards winter, the potency and impact of the COVID-19 virus remains far from clear. But the impact on our daily working lives is evident as, for many, the almost overnight switch to permanent home working continues.
Much has been written about the pros and cons of home working. But what has been largely overlooked so far is that, as the demand for space reduces, businesses will be looking to scale back their property portfolio to reduce costs.
Reducing and optimising office space
But how companies go about releasing this space is changing too. Over the next few months, we expect the secondary sub-letting market to be flooded as businesses look for opportunities to sub-let their current space with only limited take-up. While there is much talk of the ‘death of the office’, in reality I don’t think this will happen. Rather there will be a focus on substantial space reduction, although this won’t happen overnight as meaningful workplace change takes time.
Businesses will need to wait for breaks or expiries in their leases to release space without risk. So, for a company looking to reduce its portfolio by 25% to 40%, it could take almost three to five years for them to get there.
There are a number of steps that organisations can take now to kickstart the process, including:
identifying sites to close or reduce
agreeing a new workplace strategy with senior management and business leads
designing and costing the new workplace
bringing employees on board with proposed changes.
All of this can take around 12 to 18 months to complete and those that start this change early will have a clear advantage over their peers, even if their first lease expiry is some years away.
How offices are changing their purpose
While an evaluation of office space is needed, one thing is clear: we do still need a corporate space. Teams still need to meet, both with each other and with clients. What is likely to change, though, is the time spent in the office, which will become planned and not habit. Those unable to work from home will still need permanent space. But for most employees, the day at the office will become an occasional event to network, to learn and to shop or socialise before returning home.
In the old office model, it was normal for every department to have its own dedicated space. There might also have been a floor for leadership, an employee canteen and a space for clients. The old office was where you went to work and, although you were part of a team, for much of the day you worked alone.
New office spaces will be collaborative
In the new office model that’s likely to appear, collaboration will be the main emphasis, both internally and with clients. Employee desk space will likely be reduced (by 50% or more), will need to be booked in advance and only large meeting rooms will be retained for team or project collaboration.
With this approach, every aspect of the office can be repurposed. With clients front and centre of the new-look workplace, even receptions and canteens can be modified for greater value. In the past, receptions and turnstiles acted as a barrier to entry. But entrances can be re-imagined to be more in line with a hotel lobby, where companies invite clients to sit, eat and work or just observe while they wait.
While a dedicated space for important client meetings is likely to be retained, the employee canteen, normally used for about three hours a day, can become another collaboration point – potentially a shared area for employees to demonstrate, and clients to experience, corporate culture and behaviour.
Working from home – or near it
Remote working need not mean ‘working from home’. Home working can be lonely or difficult for some, and the need to make human contact beyond friends and family is very real.
By offering their people access to managed networks of suburban and rural working space closer to home, businesses could enable employees to work not at but near home. Suburban collaborative, coworking workspaces – some small and independent, such as Hatcham House in London, The Skiff in Brighton and Moseley Exchange in Birmingham to name a few – have already been growing across the UK and provide an affordable alternative to the home or corporate office.
More remote workers in suburban and rural areas are rediscovering where they live, and there are strong opportunities for local authorities to build on this. Repurposing council space, such as public libraries, or working with retailers to convert distressed shop units, to create affordable collaboration space are just two ways to preserve and enhance a place. And this also creates valuable income with a social purpose for local government.
Central business districts have been significantly hit during lockdown, And while there will certainly be difficult times ahead, we expect these areas to revitalise as businesses start to move towards a more balanced corporate and remote working model.
For more information on how we can support with property portfolio optimisation, please contact Wayne Butcher.