The second annual WorkSpace Conference & Showcase could not have taken place at a more inauspicious time for the office market – just after the government pressed pause on the great return to the workplace.
However, last Friday’s event – Property Week’s first ever full-day virtual event – offered some of the biggest names in the industry the perfect opportunity to debate the future of the office as Covid-19 ushers in a period of “revolution, not evolution” – the theme of this year’s event.
We round up some of the key takeaways from the jam-packed event, hosted by Julia Streets, founder and director of Streets Consulting, and run in parallel to sister title AV Magazine’s AV Works.
The office isn’t dead
The big question on everyone’s lips was: has the return to working from home killed off the office? Reassuringly, the answer was a resounding ‘no’.
Although speakers accepted that workers would want to work both from home and the office, throughout the day, they stressed the importance of the personal connection, interaction and collaboration that could only be achieved in the workplace.
“I don’t refer to it as working from home but living at the office,” said Derwent London chief executive Paul Williams. “Over the last few weeks, we’ve had more and more occupiers who want to get back into the office to collaborate and tap into that creativity again.”
Argent office and investment lead Helen Causer noted that younger workers rely on being in a collaborative workplace. She cited research from Cushman & Wakefield that showed around half of workers felt their learning was suffering while working at home.
“Young people have been disproportionately disadvantaged by Covid-19,” she said. “I challenge business leaders to think about how they can support those younger people.
“This is a whole generation of talent being impacted and they will continue to be impacted by it for years to come.”
A panel on investment and occupier demand in UK cities discussed how Covid-19 had affected and would continue to affect central business districts in key locations.
Dan Bayley, BNP Paribas Real Estate’s head of tenant representation, said that at the start of the pandemic, colleagues in business parks had geared up for a big drive into out-of-town offices. However, this had not yet materialised.
I feel as an occupier that this industry is slow to change
Alan Bainbridge, BBC
“I see no evidence of a surge towards business parks out of London,” he said. “If people don’t want to commute into London, they won’t want to go to an office in Surrey that has no buzz.”
Hines senior managing director Ross Blair said investor demand for office buildings was still there and that the interim drop-off in deals was primarily down to viewing difficulties.
“A volatile market provides the most interesting investment opportunities,” he said. “But in the London investment market, people want to see the physical space, and with 70% of London investment volumes from overseas, they can’t get on planes and see the spaces right now.”
Landlords and tenants
Also under the spotlight during the event was the changing relationship between landlords and tenants. Katrina Kostic Samen, director and head of workplace strategy and design at KKS Savills, said the shift to remote working had had a huge impact on both occupiers and landlords.
“I hear from occupiers that they want the current leasing structure changed,” said Kostic Samen. “There’s been talk about whether upwards-only rent reviews might be abolished, and there are questions around the flexibility of the 20-year lease.”
She added: “The whole landlord-tenant relationship has changed. Everybody wants to have great relationships, but what really happens is you do the deal and move on.
“Now, it has to be a blurring of the lines between the landlord and the tenant. You have to listen to what the customer wants; you can’t just pay lip service.”
Occupiers in driving seat
Karen Cook, founding partner of PLP Architecture, said the tenant experience was at the forefront of its design process for the nearly-completed skyscraper, 22 Bishopsgate, developed by AXA IM – Real Assets and Lipton Rogers.
“Individuals demand more choice and control over how, when and where they work,” she said.
Embodied carbon as a driver of carbon can’t be ignored any more
Juliette Morgan, British Land
“For a building to really support the individual, and to create an environment that is as good as or better than your environment at home, you need to create a microcosm of the village, which includes the high street, a park, your doctor’s office and the coffee shop.”
Alan Bainbridge, director of workplace and corporate real estate at the BBC, agreed that the occupier now had the upper hand and criticised the property industry for not being sufficiently occupier focused.
“I think it has exposed the property industry as being supply-led and not client/consumer-led,” he said.
“I feel very much as an occupier that this industry is slow to change and driven by other forces than customer satisfaction and delight.”
Another key talking point was the growing number of operator landlord partnerships in the flexible workspace arena.
Kostic Samen said that working with flex operators instead of simply letting space to them was now one of KKS Savills’ priorities.
Andrew Lynch, co-founder and chief operating officer of operator Huckletree, echoed this point from the other side of the fence.
“Gone are the days when co-working operators took extremely long leases, fitted out [the space] and tried to sell it back to the public,” he said.
Another huge talking point at this year’s WorkSpace was the impact of Covid-19 on the climate agenda. Many experts fear that we could see a repeat of 2008 when the financial crisis totally derailed the sustainability agenda just as it was gaining traction.
However, Juliette Morgan, head of sustainable development at FTSE-100 property giant British Land, said that embodied carbon remained the top priority for developers.
“Having audited our portfolio and worked with JLL to look at what the key drivers of our carbon impact are in the world, for me it’s really driven by embodied carbon, so essentially the materials and fit-out,” said Morgan.
“Many of us forget that 40% of the embodied whole lifecycle carbon of that building goes into fit-out. From my perspective, embodied carbon as a driver of carbon can’t be ignored anymore.
“There’s been a long history of rightly reporting on operational carbon, but we have a big opportunity to build lighter through our materials and commission. Even if you’re not the developer or landlord, you can still have a huge impact on that through fit-out.”
Derwent’s Williams added: “Climate change will affect human beings for many, many decades going ahead. Covid-19 is a moment in time and we’re working hard to keep staff, our children, everybody safe; but climate change is a fundamental issue, which is why we have committed to being at zero carbon by 2030.”