Is this “The Death of the Office” or “The Evolution of the Office”?
When the bulk of the UK service based workforce walked out of office buildings for the last time in March, nobody could have quite predicted the logistical hoops that would have needed to be jumped through in order to ensure a safe return to the workplace.
That is the thing with the pandemic, there is no ‘rule book’ and there was no best practice for the industry to refer to. Instead there has been a certain amount of following government guidance and applying logic of how to plan and implement the necessary measures. Because offices vary so much in their characteristics there has been no ‘one size fits all’ approach. For example, a 15,000 sq.ft. four-storey multi-let office with one lift and no concierge will require a different approach to an owner-occupied office in a business park, which in turn requires a different solution to a 150,000 sq.ft multi-let office with six lifts, regular visitors and a full concierge service.
But there is one thing we do know; COVID-19 has not just disrupted the way we work temporarily. It has acted as the catalyst for change in how and why we use offices and workspaces for years to come. Here are five areas in which the office could change forever:
1 – Technology – It is here to stay
It seems no coincidence that when offices closed, companies adapted to remote working pretty much overnight. Those individuals that had gaps in knowledge learned (often through trial and error) and alternative approaches to the physical workspace were all quickly found. Even companies that had long been reluctant to embrace the technologies have had no choice but to do so.
Because it was business-critical for service led companies to adopt Microsoft Teams, Zoom and cloud computing systems, the pandemic has shown that alternative approaches to the physical workspace do work and employees can be trusted to work from home. In some cases, the daily team calls have actually improved communication in companies compared with the weekly or bi-weekly meetings pre-COVID where the usual suspects always found excuses to get out of.
Because of this, internet connections and speeds will become even more important in the post-COVID workplace and we can also expect to see the workplace become a more collaborative environment as employers and employees will want to maximise their productivity while in the office.
In the short-term expect to see a temporary halt on ‘hot-desking’ which could cause logistical issues for companies that have completely designed their office space to accommodate hot-desking, meaning they do not have capacity for everyone to be there.
2 – Flexible Working
With employees demonstrating that they can work from home efficiently, the precedent has now been set and employers will no doubt look to offer flexible working to employees moving forward. For a lot of people it could be argued that this will lead to an indirect pay increase due to the savings on commuting, eating out for lunch and for parents with young children who will save on childcare.
The pandemic has of course been an unprecedented event where a lot of interim measures have been rushed in through necessity. As we return to ‘the new normal’ there will be an obligation on employers under the Health and Safety at Work Act 1974 and other legislation to ensure that employees have safe working environments at home and are not simply working from home twice a week, sat on the sofa hunched over their laptop.
If employees are working from home frequently – some of whom will live in rural locations – will the quality of the internet provided sit as a responsibility of the employer or employee? If the latter, could employers stipulate minimum internet speeds in future contracts that involve an element of working from home?
3 – Lease Structures
It is likely that the post-COVID office market will start to accelerate other trends that were beginning to emerge prior to the COVID outbreak. Occupiers were already starting to lean towards shorter, more flexible leases and were beginning to demand further transparency around building costs. It is likely that landlords and property developers will need to react to this shift or potentially face larger void periods. The days of occupiers signing up to 10 year leases on a Cat A fit-out which they have to fit-out themselves and then pay separate invoices for rent, service charge, utility consumption, business rates and insurance recharges may become a thing of the past.
As office costs come under greater scrutiny and cash-flows closely monitored as a result of the economic uncertainties, it is likely that occupiers will want to reduce their up-front capital expenditure and seek additional transparency around costs so they know exactly how much they are paying each year. This could result in an increase in the delivery of Cat A+* office space and landlords offering office suites on an all-inclusive basis (rent inclusive of rates, service charge, insurance and utilities). In addition we may begin to see rents more frequently quoted on a desk-space basis (with an industry standard desk size and density ratio potentially adopted) as opposed to on a square foot basis, because it is easier for occupiers to know the number of desks they need rather than the amount of floor space. If this was adopted in industry it would overhaul rent comparables as we currently know it, which is typically on a headline rent per square foot basis excluding service charge, utilities, rates and insurance.
In today’s socially conscious environment, occupiers will likely place a premium in the short term on office space that meets their Corporate Social Responsibility goals, and in the medium-longer term it is likely that spaces that don’t meet these needs will trade at a discount and face longer void periods. This combined with a shift towards all-inclusive rents would place the onus on landlords to make their buildings more energy efficient in order to attract and retain occupiers but would also present an opportunity to optimise their net rent (in the case of all-inclusive leases).
4 – Building Management
As we ease out of lockdown, property managers have been in constant dialogue with occupiers and have worked tirelessly to provide safe buildings and a safe working environment. Some of the measures that have been implemented by property managers and employers are:
The implementation of one way systems within buildings.
Use of sanitising stations.
Increase in the scope and frequency of cleaning within buildings.
The closing of kitchens and tea points where they feel they cannot adequately manage the risk.
Reduction in number of desks in offices to adhere to social distancing guidelines. In some cases this has resulted in staff either booking a desk or ‘buddying up’ with a colleague and communicating between themselves as to who is going to go into the office.
Some of these will no doubt be temporary measures, but changes to office densities and cleaning patterns within buildings may well still be in place longer-term.
With the workforce becoming increasingly tech-savvy and as the property industry starts to embrace IoT technologies, the use of tenant engagement apps could become commonplace in future. Tenant engagement apps such as Equiem, Locale and Cureoscity have already been introduced to large-scale buildings pre-COVID and these apps have features such as:
Being able to book in visitors using the app – Visitors then get a QR Code which they would use on security turnstiles.
Occupiers able to log repair items through the app which feeds through to the property managers helpdesk.
Integration with access control systems.
Meeting room bookings.
Building managers sending announcements to tenants such as weekly fire alarm testing via the app.
Management of personal and building deliveries – Tenants receive a push notification when deliveries arrive.
Admittedly apps with these features have only largely been seen in larger scale developments that usually come as a blank canvas in terms of lease structures, with a landlord or a developer bold enough to embrace and a service charge budget healthy enough to absorb the ongoing costs associated with these. For smaller to medium sized offices we may see an app with reduced features that enables occupiers to log maintenance issues and which stores key documents such as building handbooks.
The power of IoT within buildings however is limitless and Edge Technologies are pioneers in this field. They have delivered projects such as The Edge, Amsterdam for Deloitte which enables employees to change temperature, light intensity and humidity to their preference via their app.
5 – Air Quality
Ten years ago, WiredScore did not even exist, yet now it is almost universally adopted in the commercial property industry as the reference point when comparing the digital infrastructure of buildings. With the events of the COVID pandemic, we can expect discussions around air quality to become more prevalent in society and we can expect to see this conversation begin to emerge between occupiers and landlords/ developers.
The property industry could adapt to this change by adopting an industry standard certification for air quality and we could start to see sensors installed in buildings that collects data on temperature, humidity, the concentration of carbon dioxide, chemicals and dust.
Any talk about ‘The Death of the Office’ is very much premature. Humans by their very nature are social beings that rely on interactions and building relationships to survive and thrive and no amount of conference calls, Teams calls or Zoom meetings will ever replace or replicate that physical interaction. That being said, the office as we know it will evolve to meet the changing demands of occupiers and employees, and there will be a responsibility on landlords and developers to drive this change and provide space to meet this need. Some of these changes may be temporary but some, no doubt, will be here to stay.