Brave new world?

• We expect to see a further flight towards quality, a continuation of the trend that has been intensifying in recent years
• We will see the greater adoption of building technology to generate data that supports the curation of the workplace experience
• There will be a growing need for workplaces that are able to accommodate a more flexible and agile workforce

Where we have been: from existential crisis to increased evolutionary cadence

The last 12 months have seen millions of words written or spoken about the demise of the office. Covid-19 has served to resurface a debate that, in truth, has rumbled on more than one occasion over the last 20 years. But it has also brought more bite to the debate as occupiers were faced with no choice but to operate remotely as lockdown measures took effect.

“Remote” working became a stark reality for more people and more organisations than ever before. According to its Work Trend Index Report, Microsoft saw its online Teams service hit a daily record of 2.7 billion meeting minutes in one day during late March, while J.P. Morgan analysis suggested that Zoom had 28 million active monthly users by the end of March. The onset of this great global workplace experiment brought practical proof points into play.

Not much patience was in evidence, however, in the evaluation of that experiment. Instead, what followed in the spring and early summer of 2020 was an extreme debate – fuelled by a range of surveys and studies – whereby the majority of commentators promoted a brave new world of work that seemingly vanquished what had gone before. The pendulum swung full tilt towards the talking down of offices as an unnecessary cost and burden and the talking up of home working as the key to increasing productivity and enhancing personal well-being. Cue a period of extreme hyperbole within the mainstream press and the (mis)appropriation of a range of corporate statements from big banks (Barclays) and big tech (Twitter, Facebook, Shopify) to usher in a supposedly new revolutionary era.

Well, not so fast! As the summer sun faded, the pendulum started to swing back and the tone of those corporate statements started to soften. The proposed benefits of remote working started to wear thin and were replaced with growing fears about a secondary mental health epidemic as workers became more isolated, more burnt out, “always on” and unable to create effective boundaries between work and home.

For example, in a survey by Asana, four in five (79%) of UK respondents stated that balancing family responsibilities with work was leading to major changes to working routines that were, in turn, significantly impacting on their work, with 77% admitting to finding it hard to switch off in the evening. Living at work has not been problem-free.

“Concerns have also been growing about the difficulty of creating and nurturing new relationships – aka social capital.”

Moreover, many businesses started to question the wider benefits or sustainability of a fully remote model. Some 37% of Western European companies surveyed by Willis Towers Watson, for instance, reported that remote working had a material or small negative impact on company productivity.

Concerns have also been growing about the difficulty of creating and nurturing new relationships – aka social capital – or galvanising corporate culture without face-to-face contact; while the challenges of on-boarding new staff and the limitations of being truly collaborative and innovative in a digital-only environment were called into question. For instance, more than 57% of respondents to an Okta.Inc survey about the Covid-19 workplace said that they missed in-person conversation with co-workers, with half also missing the relationships they had with others in the office.

This has clear implications for staff well-being. A Hays survey of 16,200 professionals published in May found that those who rated their well-being as negative rose from 7% pre-lockdown to 23% during lockdown – with over a quarter citing a lack of social interaction as being their greatest challenge. As the lockdown wore on, it was increasingly evident that the work and workplace debate needed a reset.

Extreme situations often create extreme reactions. This has further fed into a future workplace debate traditionally hampered by a narrow either/or choice between working from home, or working from the office. Such a position has become much less viable as the pandemic continues. At those points when the re-occupancy of offices has been permitted, it is clear that the need to respect social distancing requirements – along with other factors – has resulted in fewer staff than before returning to the office. The result? A more dispersed workforce, with teams and individuals combining time in the office with time working remotely, and the rise of so-called hybrid forms of work within organisations.

Read: The occupier mindset

“Remote working will have its place for some people, for some tasks and for some of the time.”

There is a growing appetite for such a model of work. More than three-quarters – 77% – of respondents to an extensive global workplace survey by Iometrics, for example, wish to continue to work from home at least once weekly when the pandemic is over. This represents a 132% increase over those who did before Covid-19 struck. Numerous other surveys point to similar findings, suggesting a groundswell of employee opinion towards a two days home, three days office working arrangement in the future.

Of course, there will be huge variation according to business sector, company and job type. But it is clear that our relationship with the office will become less fixed and more flexible. Remote working will have its place for some people, for some tasks and for some of the time. This is far from spelling the death of the office. Instead, it points to an accelerated evolution of the office to deliver greater business benefits while supporting and supplementing new and emerging working styles grounded in greater choice and increased flexibility.

Where we are going: what does this mean for London’s offices?

Vaccination programmes have now begun in earnest and provide some light at the end of the tunnel. A key influence on near-term market dynamics will be the extent to which the behavioural changes seen in both employers and employees persist. A further, linked, influence will the strategising that many occupiers have undertaken over the last year, drawing on lessons, both good and bad, from the great global workplace experiment. 

Whilst the impact will clearly vary between businesses, and indeed sectors, it is likely that some changes in working style will be retained, thus driving occupiers towards different approaches to the workplace. We believe this will lead to more refined and defined market demand as 2021 progresses but we also recognise that this demand will be different both quantitatively and qualitatively from what went before, hastening the evolution of London’s office product.

There are many implications for product but three will be particularly relevant. First, we will see a push towards even more amenity-rich spaces. An intensification of a recent trend, will lead a further flight towards quality spaces with first-class amenities and services that support physical and mental well-being, education and personal development, and socialisation. In a hybrid world of work, such spaces are central to giving employees a reason to invest in their commute.

Second, we will see a greater adoption of building technology to generate data that supports the curation of the workplace experience, the active management of the workplace environment, and to underpin the occupier’s future business case for continued investment in office space.

“Delivering to the changing occupier requirements brought on by a new world of work will be challenging.”

Third, we see an emerging tension between creating workplaces that are able to accommodate a more flexible and agile workforce but which at the same time conform to heightened expectations around workplace health and safety. As offices move further away from being fixed bases for administration towards places for more fluid collaboration and innovation, the trend towards hot-desking will continue to be favoured, particularly in an environment where each individual desk is likely to be more spacious and separate from other desks. Creating and managing an office environment that enables de-densification and more agile occupation, but occupants safe (or protected) from transmission risk, will be critical to meeting customer need.

Delivering to the changing occupier requirements brought on by a new world of work will be challenging and market polarisation is a real possibility as the gap between those landlords who respond and those who revert to pre-Covid approaches widens.

Going forward, those who create offices that are more customer-centric, reduce environmental impact and proactively utilise technology and data will win in the brave new world of work. Spaces that are safe, sustainable and smart will command the highest rents, generate the strongest returns and be best placed to secure longer-term income. From an occupiers' perspective, these are the sort of work environments that will most strongly resonate with changing expectations and support both staff and business needs.

View our video: London Office Leasing - World Post Covid 

Part 1: Key themes from the past 12 months