Agile working will keep office landlords on their toes

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Flexibility enables businesses to retain staff but consolidate space. Rachel Hunter reports

“Extreme estates rationalisation” was a key theme at last week’s CoreNet Global UK summit in London. Top occupiers discussed how they are reviewing their property portfolios to respond to a tougher economic reality.

An increasingly popular strategy is “agile working” — although it is not a new concept by any means. Over the past decade, many forward-thinking companies, such as IBM and Unilever, have embraced hot-desking and mobile working. Employees can work at their preferred time and place — as long as they get the job done.

Since the downturn, however, the concept of “mobility” - to use IBM’s term - seems to have trickled down from the global, high-tech frontrunners to a broader range of businesses that want to streamline operations and maximise efficiency.

Technology advances and a wider acceptance of flexible practices, such as working from home, have made this more achievable. As a result, the property sector will have to adapt to changing requirements among office occupiers.

Office take-up decreased in most regions last year
 2010 (sq ft)2011 (sq ft)change
Central London12,019,4037,140,681-41%
Birmingham668,380669,801+0.2%
Edinburgh692,911567,263-18%
Glasgow496,231306,117-38%
Leeds283,222398,160+41%
Manchester1,326,964699,300-47%
Western corridor2,092,2631,790,904-14%
Bristol458,823425,289-7%
Cardiff275,263485,000+76%
Source: Jones Lang LaSalle

“Some property people don’t understand the impact of agile working,” says Alan Dornford, director of markets at Capita Symonds. “Investors perhaps don’t recognise - or don’t want to accept - that it’s going to happen.”

The consultancy has watched agile working gain momentum in recent years. It believes businesses can gain 20%-30% in efficiency by implementing flexible working practices. They can expand their workforce without increasing space, or consolidate space without losing staff.

In fact - perhaps surprisingly - public sector organisations are now leading the way, as tax-funded organisations are under particular pressure to make the most of their property portfolios.

As reported in Property Week, the NHS has created its own property company, tasked with disposing surplus schemes (public sector, 03.02.12). The government also aims to make better use of its empty office space by renting it to entrepreneurs and start-ups.

Meanwhile, Capita Symonds is working with Network Rail to implement agile working across its vast property estate (see box below).

“The public sector is really switched on to this,” says Dornford. “Network Rail will end up being more efficient than a lot of really sleek, private sector businesses.”

However, Capita Symonds also advises global private companies on embracing new ways to shrink space. Furthermore, the consultancy has decided to practise what it preaches. In 2014, it aims to combine two of its London offices, which total around 50,000 sq ft, and is looking for a site for new headquarters.

“The old way to look at it would be to say we need a minimum of 50,000 sq ft, and then factor in 10% growth,” explains Dornford. “Now we allow for growth at whatever the percentage, but we look at what happens if we’re more flexible and take out space accordingly.

Different factors fit into the calculation.”

He adds: “By 2014, we want to make sure we are a true agile working business, so we’re in the thick of maximising our own working practices now. This isn’t just about cost - that’s a happy byproduct -it’s about productivity and getting the most out of your building.”

Getting rid of “nine to five” and sharing a desk will be a big change for many businesses. There is a cultural barrier to true efficiency that must
be overcome, says Dornford.

As companies emerge from recession, however, the ability to trim office space, absorb growth into an existing portfolio and create a more flexible and inspiring workplace will improve profitability and keep office occupiers healthy.

“Office space needs to be geared up to what people want to use it for,” he concludes. “It’s about cost and operational efficiency, but it’s also giving people a different workplace that really enables them to do their jobs.”

Network Rail

Network Rail aims to implement agile working across its vast property portfolio in a bid to make the most of its space and cut unnecessary property costs.

It piloted a new scheme, developed in partnership with Capita Symonds, at its Waterloo offices in the second half of 2011.

The programme included a refurbishment.

The Waterloo office has now been reduced by 22,500 sq ft to 80,234 sq ft. However, it accommodates around 200 extra staff. They joined from a 42,543 sq ft office at New Kings Beam House in Southwark, which was then sold — saving £2.5m a year. Agile working and a reduced footprint saved a further £1.2m in property operating costs per year.

The refurbishment comprises a mixture of fixed and shared desks, a range of informal “collaboration areas”, and meeting rooms, explains Capita Symonds director David George.

“It marks a move away from a rigid ‘having to be seen at your desk’ mentality, to a more flexible and trusting approach, based on work output,” he says.

The five-year programme will cover a significant proportion of the Network Rail estate, which comprises 150 offices and 35,000 employees.

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