There seems to be major angst building over how real estate will respond to seemingly conflicting reports about how productive and safe everybody is at home, versus the time and expense of working from an office.
It astonishes me that people think this is a new phenomenon. What you have in reality is an acceleration of trends very evident for the past few years. Technology allows us to work from anywhere and there is now a presumption that this is acceptable. For millennials, long commutes are anathema. They also want a working environment that blurs seamlessly with their personal lives, and an employer and workspace that accord with their belief system. Covid-19 has just brought all this into sharper focus.
A lot of office occupiers have been considering how to adapt to this for a while. They demand flexibility (both physical and legal), access to high-quality staff amenities and strong social and environmental credentials. They realise that in a lot of cases, the office they occupy is a direct reflection of the brand image they project, and this will be a major factor in recruiting and retaining their key talent. The importance of this won’t change post-Covid-19.
We also know that office demand in regional cities and towns has increased rapidly over the past few years. We know about the surge in values driven from the knowledge sector along the Oxford-Cambridge Arc, with Cambridge leading, Oxford following on and Milton Keynes about to get in on the act. We have also seen a surge of demand and value in cities such as Brighton and Bristol, which benefit from a very high-quality lifestyle offer as well as rich pools of local talent.
This trend is likely to accelerate as large businesses realise they can both cater to their employees’ wishes to reduce commutes and save money by adopting a hub-and-spoke office strategy.
First-rate regional space
This will further increase the demand for space in these locations – but not any old space. It won’t be acceptable for the new offices at the end of the spokes to be seen as second-rate; they will need to provide all the flexibility, wellbeing and sustainability credentials that employees and employers expect.
The other question being asked is whether a glut of office stock will come back to the market as occupiers realise that their staff can work efficiently from home, and see the opportunity to cut costs. This misses the whole point of the office. Of course you can work very efficiently – sometimes even more efficiently – from home. But humans aren’t wired or motivated by efficiency; the office performs a crucial role as a place of collaboration, idea creation and learning. These are far harder ambitions to achieve in an online world. And the talent pool you will be fishing in, if that is your employee offer, will be very shallow.
So at the end of this global upheaval, we might actually end up with better workspace spread more evenly around, helping to support regional high streets, with occupiers and employees finally getting what they want.
Barry Jessup is a director at First Base