Despite the current climate, office investment and development and planning for office led schemes is burgeoning, as the confidence in at least a partial return to the physical workplace remains.
Recent reports highlight that The City of London Corporation has approved plans for the equivalent of over two Gherkin towers to be built, and a spate of regional office developments in the likes of Birmingham, Leeds and Nottingham demonstrate the continuing appetite for office space.
The role of the office as a component of working life is still viable and when you add the investment potential of owning this kind of building, the prominence and promise of these new developments is clear. Larger companies especially still derive a significant level of brand equity in the market from their office buildings which provide a sense of belonging and community to employees and help to increase engagement levels. Furthermore, the progress of deploying the COVID/19 vaccine is leading major businesses to consider and make plans to capitalise on the huge benefits of office working and refreshed enthusiasm for social working environments.
It is important to consider the behavioural changes that will govern the return to the workplace – after all, the roadmap to ending lockdown announced this week simply facilitates that return, not the way in which people will respond to it. The assumption that the majority will work in the office for most of the time has rapidly disappeared, replaced by health concerns and a more habitual approach to working from home fuelled by the recent lockdowns. However, this is counteracted by the proportion of the workforce who desire physical interaction and contact with their colleagues as an aspect of motivation and productivity – which helps explain and contextualise the growing pipeline of office developments and refurbishments nationwide.
The government is very much behind this, demonstrated by their Government Hubs project which is a network of planned metropolitan developments that have office and workplace needs at its heart. While the prospects of these, and other planned developments are at the mercy of the wider macroeconomic and pandemic related dynamics, the resilience of this market segment, as well as the current government optimism, bode well for a return to prosperity for the UK’s professional and office assets.
Felicity Lindsay is a real estate partner at law firm, Gowling WLG