Office space post-Covid: What will commercial tenants expect?

The primary purpose of an office was once a shared space where the tools employees needed to perform their tasks were available, such as computers, printers, fax machines and telephones. The transformation of technology now means that many office workers can perform their tasks from anywhere. Cloud storage, mobile phones and video conferencing tools are just some of the tools that make this possible. The pandemic has only accelerated the shift to remote working and has highlighted significant downfalls to the office environment that need to be addressed.

Although office space post-Covid needs to adapt, it’s most certainly not dead. In fact, only 12% of people in Gensler’s Work From Home Survey wanted to continue working remotely full-time.  However, remote working is here to stay and most employees want to continue working from home for part of their working week. Offices will need to become activity-based and a space for collaboration and connection. Office space post-Covid will need to transform to become a ‘destination of choice’, with employees being given more freedom on where they can work.

Here are the top trends we’ve identified in what tenants will want from their office space post-Covid.

 

Safety as a top priority

Safety will be the first fundamental aspect that tenants will demand. Even as the threat of Covid subsides, mindsets have been altered in the long run. People will expect the very highest in hygiene and safety precautions. From air quality controls to increased cleaning and contactless facilities, office space post-Covid will need to adapt to the new level of scrutiny tenants will have.  Lee Butz, CEO & Founder of District Technologies said: “Safety is undeniably essential: nothing else will matter if you fail at this.”

Another consideration is for offices to set themselves up as ‘virus-proof’ or ‘pandemic-proof’ making a transition to working safely in an office during a pandemic much more feasible if it happens again in the future. A report by ARUP stated that: “Post-pandemic, touch-free technology in offices will become increasingly important and could potentially be adopted in elevators, security access, etc.”

From simply implementing a more rigorous cleaning schedule to adopting smart technology solutions, safety and hygiene will be the first and foremost priority.

Lower rents and shorter lease terms

With many countries plunged into recession as a result of months of lockdown, demand for office space post-Covid will inevitably drop. Companies will see an opportunity to downsize, particularly as many staff continue to work remotely post-pandemic. Companies that continue to lease office space will most certainly require to reduce operating costs due to the strain of the recession and expect lower rents. Companies will also want shorter lease terms, not wanting to be tied into 10-20 year leases, particularly with the uncertainty around the recession and ‘the workplace’ as we know it changing so rapidly. Anthony Lorenz, founder of Lorenz Consultancy, said: “ Rents will inevitably decline radically, especially where 30% of office workers are likely to continue to work from home, even when the pandemic has left our shores.”

That being said, real estate providers that are amenity-rich and that have tapped into the demand for an activity-based cultural hub, will be at a competitive advantage.

 

Less space

It’s inevitable that with the challenges of a recession and with companies shifting to remote and hybridised workstyles that many will opt for less space. Paul Stapley, vice president of project management at WSP, said: “Companies could see this as an opportunity to downsize, to reduce operating costs and invest more in technology,” 

Demand will vary heavily from sector to sector, tech firms that are well equipped for agile work may opt for fully remote or partially remote working, requiring much less office space, leisure, hospitality and tourism industries may have to scale back due to the impact that the pandemic has had to their industries while other industries may require a similar amount of office space as they did pre-pandemic.

 

Decentralisation

Although most office workers want to return to the office for part of their working week, what nobody missed was arduous commutes. As part of the facilitation of a more flexible work environment and a better work-life balance is a move to decentralised offices, with smaller satellite offices in regional locations and second cities. In an article by Property Week, Emma Long, Manager Director (North) at BizSpace, said: “This ‘hub-and-spoke’ model can help people return to the office with confidence and help facilitate the much-needed shift to more agile working, empowering staff to work when and where they want. Many graduates and other workers starting out their careers have for too long been excluded by the steep commuting and relocation costs of some businesses’ London-centric office footprints.”

In WSP’s article, Professor Kerr from Harvard Business School, said: “A lot of companies are going to be thinking about how they could make their workforce if not pandemic-proof, at least pandemic-resistant. Opening a second office might not have made sense historically, but maybe something that younger companies should do at an earlier stage. We have celebrated density and packing people together, but that’s putting a lot of eggs in one basket.”

Decentralising will also mean massive cost savings, so it’s an attractive option for many companies particularly with distributed staff members.

 

Reconsidered Central offices

Although there may be a shift to decentralised office locations, city-centre office locations are not dead. Although many companies may shrink their square footage in central locations, with the purpose of the post-pandemic office being about an activity-based culture hub and a destination of sorts, a building centre with a lack of amenities and transport nearby does not quite fit the bill. City centre office locations will need to focus on creating a space around culture, activity, connection and collaboration. A destination of choice. While the satellite offices offer facilities offering a more practical day-to-day base for nearby staff.

An article on Consultancy UK by Anthony Lorenz, founder of boutique commercial property consultancy called Lorenz Consultancy, said: .Consultancy UK: What we are seeing is a significant change in demand for space, and whilst I do not believe that demand for offices will disappear, the way that companies envisage their needs has transformed almost overnight.

 

Workplace technology

Workplace technology will facilitate a shift to distributed working. Arup tapped into this trend and proposed that employers may implement “a flexible toolkit of workplace offerings” which would allow employees to understand the facilities at their disposal, giving them the choice on when and where they work. The report continued to explain how technology such as a workplace experience app could be utilised to create a cohesive workplace environment: “One way of making this possible is the concept of ‘digital concierges’. The digital concierge is the interconnectivity of clusters of spaces spread over a portfolio of assets, which are governed and accessed through apps or other interactive platforms. This helps make an otherwise discrete group of spaces and environments part of a cohesive whole.”

Concierge

Coworking shake-ups

Even as the threat of Covid surpasses, there will continue to be a heightened awareness of health, safety and hygiene. We believe that this will increase demand for self-contained spaces and that demand for coworking facilities will decline somewhat, with some consolidation to be anticipated. In an article with Marketplace, Alex F. Cohen, a real estate advisor with Compass, said: “At the end of the current crisis, given, at least short-term, severe economic uncertainty, I expect new and renewed commitments to coworking space to be dramatically off original forecasts.” However, self-contained office facilities will need to take inspiration from coworking to improve their facilities to offer what tenants want, such as being community-led, amenity-rich. For coworking facilities to survive, they will need to adapt to attract larger corporate clients. Flexibility in commercial real estate will continue to be important, and coworking could be utilised by companies to facilitate a distributed back to work strategy. Tom Carroll executive director of EMEA research and strategy, JLL, said: “Flexible space has become an integrated part of portfolio strategy so we’d expect that to continue. In fact, we may quite quickly see a requirement for teams to set up or to leverage more flexible space solutions, even in the re-entry process and certainly as we move further forward. In the long term, we’re only going to be seeing more flexible, agile, dispersed and distributed work and portfolios.”

 

Better equipped and activity-based offices

 

With a blend of remote working to continue to be on the cards, offices will need to be better equipped to become a destination of choice. Magnus Meyer, Managing Director WSP Nordics & Continental Europe, said: “This crisis is probably going to accelerate the need for modern, flexible office space with lots of services. The buildings that suffer will be the older ones that tenants just don’t want any more. They’re just the wrong product.” Landlords will need to enrich their spaces with amenities, services, technology and sustainability solutions to set themselves apart from the competition. Ultimately, the office will need to be optimised to allow people to be productive and engaged and strike the right balance in its design to facilitate collaboration and connection while having enough space for people to be at a safe distance from each other. The office will need to provide some of the aspects that home-working can’t offer, whilst also bringing in some of the benefits that home working provides, such as creating a more relaxed environment with soft furnishings and decor. In WSP’s article about the office as a destination of choice, they discuss the office will become an appointment destination: “But how do we know that the people we want to see will even be in the office that day? We will need to plan our visits more carefully to get the greatest value from them – reinforcing the idea of the office as an appointment destination.” Smart technologies will be key to the success of this new way of work. People can check their workplace experience app to see who will be in on a given day, and plan their work week around that.

 

 

One of the key considerations for landlords is to identify what they can implement to set them apart from the crowd and to make it a destination where tenants want to go. Landlords will need to put safety first, to build confidence in their tenants to return to the workplace. The future workplace is no longer one office with four walls. Smart technologies will be key to the future workplace, facilitating communication, connection and cohesion among distributed workforces. Office space post-Covid will need to become a location for collaboration and connection and be carefully designed to allow for space and comfortability. With flexible and distributed work patterns the new normal, offices will need to adopt trends in the hotelisation of office space to create amenity and service-rich environments that drive a sense of  ‘fear of missing out’ if fellow employees aren’t in when their peers are. The office needs to become a culture hub and it needs to offer tenants and their employees a choice away from their home working environments. 

The future workplace is hybrid, and the future office needs to become an experience. We can’t wait to see you there!

 

- Share this post -