Rumours of the death of the office are greatly exaggerated

Remember the office? The place we’d rush to in the morning, perhaps enduring a lengthy commute, then sit staring at a screen for eight hours before an equally unpleasant commute home with hundreds of others all doing the same? Why would we ever go back after the revelation of working from home? Opinion pieces abound at how COVID-19 signals the death of the office but this is to ignore the fundamental benefits it brings. If there’s one real estate sector that needs resilience and re-imagination in these challenging times, it is the office. Collaboration between owners and occupiers will be fundamental in re-imagining the office as the workspace of choice for the future.

What are occupiers looking for?

An organisation’s greatest asset is its people. Lockdown has highlighted this, as companies have adapted to working from home with indications that productivity, perhaps surprisingly, has increased. The focus on employee wellbeing began before the pandemic, but has been greatly accelerated by it. We can expect managers to accommodate employees’ desire to work flexibly between home and the office whilst balancing the challenges of supervising and mentoring younger staff and their desire for social interaction.

An office is essential for a company to create and instil its culture. Its social capital, built up over years of working together, will soon dissipate if colleagues permanently work remotely. Whilst many laud the virtues of working from home, the sense of collaboration, connectivity and camaraderie from being surrounded by your co-workers cannot be satisfactorily recreated on Zoom. They also miss the equality of the office, where everyone benefits from the same facilities, not the disparities of working from home, where one worker’s fully kitted out home office is another’s kitchen table and intermittent internet connection.

What does this mean for owners?

The greatest risk to owners is the likely downsizing by occupiers who realise they can function equally well with a large proportion of their workforce at home whilst reducing costs. In the short term, virus concerns will lead to reduced densification within the office. Spreading employees out and allowing for staggered working means space requirements and therefore lease demises may remain the same. Going forward, how we configure the office space we occupy will change to meet the flexible working patterns of the workforce, and whilst this may see requirements reduce, the fundamentals of an office environment will remain.

More than anything occupiers want flexibility. There has been an increase in tenants looking to renew their current leases as they remain in “wait-and-see” mode whilst the trend towards shorter leases continues (the UK average for offices is 6 years). Occupier demand for fitted offices is increasing, allowing them to make a cost-neutral move on flexible terms. But such flexibility can benefit owners too, allowing them to keep their offering fresh and relevant, with rental increases at each lease renewal. 

Fundamentally, an owner that recognises and fulfils its occupiers’ desire for agility and flexibility will thrive.

How can offices come back stronger and greener?

A healthy building supports the physical, physiological and wellbeing of its occupiers. It is incumbent on owners to adapt and repurpose the space they offer. With many real estate companies making ambitious zero carbon commitments, owners should not miss the opportunity to capitalise on sustainability awareness that has arisen through lockdown. The financial risks of ignoring sustainability – with investors, occupiers and buyers looking elsewhere – are too costly to overlook.

Occupiers will look for clean air, carefully (and where possible, individually) controlled heating and humidity and an emphasis on natural light and nature. Facilities management should be pro-active and all parties will benefit as energy costs and emissions fall. Embracing technology for smart building monitoring will be key and owners and occupiers must collaborate in sharing data to ensure meaningful results. The augmented workplace, with apps to control the employee experience, is the future.

Owners should repurpose the nature of space offered. Employees need a reason to return to the office, so owners should consider offering more flexible, collaborative and innovative space such as converting floors to provide additional meeting space which can be offered to tenants on demand and at a premium. Owners may also consider diversifying, as the “hub & club” model, with regional hubs to minimise commuting and a “club” space for meetings and collaboration in the city centre.

The vital role that offices play in creating and reinforcing an organisation’s culture and community is more essential than ever following the COVID-19 pandemic. Employee health and wellbeing is in the spotlight and improved sustainability provides a complementary solution. Owners and occupiers can work together to provide a dynamic and flexible workspace, where employees feel safe and happy to work enabling their companies to flourish. The COVID-19 crisis is not the end of the office, it’s a new beginning.

This article first appeared in Cambridge University Land Society Magazine. Please contact Werner Baumker for further information.

Our content explained

Every piece of content we create is correct on the date it’s published but please don’t rely on it as legal advice. If you’d like to speak to us about your own legal requirements, please contact one of our expert lawyers.

Mills & Reeve Sites navigation
A tabbed collection of Mills & Reeve sites.
Sites
My Mills & Reeve navigation
Subscribe to, or manage your My Mills & Reeve account.
My M&R

Visitors

Register for My M&R to stay up-to-date with legal news and events, create brochures and bookmark pages.

Existing clients

Log in to your client extranet for free matter information, know-how and documents.

Staff

Mills & Reeve system for employees.