The Office

The value of offices is generally well documented and uncontroversial when it comes to social interaction, employee engagement, culture, creativity, and corporate branding. All these factors lead to higher employee satisfaction and productivity – to everyone’s benefit.


Yet, according to the overwhelming consensus, workers’ relationship with their office workplace will structurally change in a post-inoculation world. When it comes to ‘how’ and ‘to what extent’, the picture is frustratingly complex. I have listed some of the known unknowns as an appendix to this note.


Given the prevailing uncertainty in the industry, scenario planning is the right way forward for all real estate market participants. To frame this approach, I see three fundamental assumptions as fair and reasonable.


The first is that both workers and employers will continue to value the role of the office for all the good reasons outlined earlier.


The second is that, on the back of the experience of the last twelve months, many workers, in particular those operating in big cities, will have a significantly smaller ‘budget’ for commuting time in any given week. They will also look to use that budget in a flexible manner. This will represent a gain in productivity and money with the added benefit of being environmentally friendly.


The third and last assumption is that office buildings will adjust to drive up the demand for them, a market-induced dynamism which tends to be underestimated. In fact, the best buildings will evolve in a way which will create a new demand for office space. Given these trends, the premium for prime, high specs office buildings over the ‘average’ building is expected to increase in a material fashion.


An emerging picture is that of a ‘hub and spoke’ set up with one downsized headquarters complemented by one or more strategically located satellite offices situated closer to workers’ home location. Under a decentralized configuration, the home office, the headquarters, and satellite offices will be part of an ‘extended workplace’. Co-working and ‘space as a service’ will represent an elegant formula for many companies as it allows for flexibility and the sharing of amenities whilst forming some form of highly productive cluster.


Office buildings will increasingly benefit from a high technological content (temperature, light, filtered air, antimicrobial materials, touchless tech, collaborative open space, easily bookable offices, people flow / distancing management, green credentials). Combined with the convenience of retail, gyms, cafés and restaurants, and perhaps even hotel rooms, they will go a long way to foster an enjoyable and productive environment as a welcomed, if not much-needed alternative workplace to home.


Furthermore, proximity to satellite offices will allow employees not only to remain within their smaller commuting budget and enjoy the many benefits from offices, but also to increase the degree of social interaction with workers which are conveniently living in the same area, thereby providing an opportunity for an enhanced community dimension compared to the 2019 status quo.


Based on the above considerations, a reasonable scenario suggests that the future demand for office buildings is bright. It provides an exceptional opportunity for suppliers of building equipment – provided they adapt to the highest quality and tech standards.


And for leadership teams, there is a new opportunity to build a competitive advantage through the establishment of an optimal extended workplace set up.


The Future of the Office – Known Unknowns


  • The percentage of workforce which can operate remotely;

  • The percentage of employees who can work remotely and would look to do so on a full-time basis;

  • The percentage of employees who can work remotely and who would only look for the flexibility to do so;

  • The number of days employees who opt for flexibility end up spending in the office per week;

  • The extent to which the commuting time affect the previous variables;

  • The extent to which the optimal office space per employee could increase in the future (social distancing, private space, amenities, etc.) as part of a de-densification trend;

  • The appropriateness and acceptability of hotdesking;

  • The extent to which improvements in public transport can reduce commuting times;

  • The extent to which greater proximity to decentralized offices could attract people who are currently working or would otherwise plan to work 100% remotely;

  • The extent to which the accelerated adoption of (new) building technologies can reduce demand for space;

  • The extent to which a reduction in business trips will increase demand for office space;

  • Regional, if not national differences;

  • The impact of the workers’ age mix on the above; and, finally,

  • The impact of a company’s size on the above.


Readings/Sources


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