Reasons why the office will not be consigned to history

Research suggests that firms with a business model that relies on innovation are likely to experience a fall in productivity and revenues with the introduction of large-scale remote working. Yahoo! famously repatriated its remote working staff to the office several years ago in a bid to address this issue.

Also, prior to the COVID-19 pandemic tech giants Google invested tens of millions of pounds in a new, purpose-built, 750,000 sq ft building that is currently under construction at King’s Cross, and Facebook took a pre-let on over 600,000 sq ft at the same scheme.

However, going forward there will now be a much greater use of video conferencing. The lockdown has forced employees to utilise technology and to become adept and confident at using it. The key for employers will be to get the balance right.

Informal, unplanned communication such as a chance encounter with a client or overhearing a conversation can be important. With a lower exchange of ideas, knowledge and creativity will be diminished.

The brief conversations over a kettle would never make it into a video call but can be some of the most interesting and productive exchanges.

That is not to say that informal communication will not take place, with employees increasingly using social media. Prior to the lockdown, this was discouraged by many employers, but the use of the more stable and secure internet platforms is now being actively encouraged.

You learn from being near your colleagues, observing them, and asking them questions. Indeed, the challenges of ‘distance learning’ are becoming all too apparent for many, as a consequence of home-schooling.

One of the key office processes that would be lost without an office environment is that of mentoring. Most professionals remember particular mentors at different stages of their careers, it really can’t be done remotely, and often key lessons are learnt through spontaneity.

In addition, people management becomes more difficult outside the office, and some staff simply need a high degree of oversight.

It will become increasingly difficult to get to know your colleagues as existing staff leave and new joiners start over time, and this will not necessarily have become apparent in the lockdown period so far.

Unfortunately, working remotely limits interaction between different age groups, job roles and seniority – an office pulls people together as a team and people get to know each other on another level.

Also, the loudest voices will always be heard in virtual meetings, but the strength of an office comes from everyone’s input and personality – and working as an office team is the most effective way to get the best out of people.

There are many reasons why this may be. Furniture may be unsuitable, the internet bandwidth may be insufficient, or the ability to find quiet space for long video calls may be limited. Other issues could be even more challenging such as the ability to observe confidentiality and security practices.

Some of these issues could be addressed through providing better equipment (perhaps funded by the employer), with employers actively helping homeworkers to get their environment right. However, some problems will be outside the scope of what an employer is able to do.

There will need to be a greater focus on the quality of the home environment rather than the current ‘make-do’ scenario when working remotely.

This issue will potentially affect different age groups in different ways. Younger people in particular may want to be in the office more. Not only are they more likely to be in accommodation less suited to home working, but they may also have a greater desire to socialise and build personal networks.

With increased remote working, there is likely to be a negative impact on mental health through a lack of socialisation during the day. Research suggests that people who work from home for a prolonged period tend to feel more isolated.

This will of course vary significantly according to the home environment, the presence of other people in the household, and the personality of the home worker.

Unsurprisingly, the mental health issue is a major consideration for employers when planning likely numbers wishing to work in an office and does form a formal part of any assessment.

It’s important to recognise that whilst some change is inevitable, there is a question over whether the human race can ever really change in that way. We all need interaction with other humans.

The health and wellbeing of staff is increasingly recognised as a vital area for corporates to address, and is an important part of the wider ESG agenda. Recent progress could be sent into reverse without a certain amount of time spent in the office.

In the same way that there is compelling evidence that good office design benefits employees and thereby productivity, poor working environments at home that are beyond the direct control of employers will have the opposite effect.

As remote working increases, the ability of firms to ensure the physical and mental wellbeing of their staff will become more challenging. In addition, businesses have increasingly used high quality office space as a tool to aid staff recruitment and retention.

Although most business functions have managed to operate successfully during the lockdown, some will still need to be undertaken in an office environment. This includes certain areas of financial trading and some sales functions. The same is obviously true of other quasi-office functions such as laboratory space.

Employees will still need to use the office to access technology they don’t have at home. Although most employees have laptops and many have printers and scanners, some tech will only available in the office, particularly as areas such as virtual/augmented reality and 3D printing develop rapidly.

The market was already responding to changing occupier needs, with the rise of the serviced / flexible office sector and shorter leases for traditional property for example.

Those tenants seeking to relocate, downsize, or move to better quality space by taking advantage of lower rents, are likely to demand shorter leases or more frequent break options to hedge against the risk of future economic shocks. Landlords are likely to be more flexible, particularly in the current market conditions, with potentially large amounts of ‘grey’ tenant-controlled space coming back onto the market.

The end of the office is a much-trailed topic. It was predicted by some with the advent of email, again with the advent of the internet and mobile phones, and yet again with the advent of agile working. Significant change was also predicted following the tragic events of 9/11 and after the Brexit referendum. Each time the role of the office was not diminished, but it did change, in some instances quite significantly. So, we should be wary of initial knee-jerk reactions.

Memories are short and COVID-19-related inhibitions about commuting or working in offices will probably pass in the longer term (assuming a vaccine or cure is found in the next 12-24 months).

For many businesses, the office will no longer be considered as a necessity but as a positive choice.

Once social distancing measures are lifted, the role of the office will focus on areas such as team working, sharing ideas and meeting face-to-face, training, mentoring, socialising as well as for forging a corporate identity and creating a sense of belonging to an organisation. These important benefits of working in an office will have been lost during the lockdown period.

The quality of space and amenities offered will become increasingly important, accelerating the existing trend. The office will not just be about work but also about lifestyle, and there may be more emphasis on amenities such as cafes, fitness and social spaces, with health becoming increasingly central to the work experience.

Clearly, these aspects will be severely limited during the period of social/professional distancing.

With the increase in walking and cycling, showers and an in-building wellness offering will be an irresistible trend. Also, offices will become more of a ‘clubhouse’ for meetings and an ‘ideas factory’, with an option to work there for those who want or need to.

Office occupation for many industries has become denser over the last decade. Desks have become smaller and more closely packed, so workers sit closer together.

The effects of social distancing mean that offices will have significantly lower densities in the short term, resulting from altered seating arrangements, staggered working times, and changes in how buildings are used and the circulation around them. Furthermore, we imagine that agile working and desk-sharing policies will be reviewed. This will significantly reduce the capacity at which buildings are able to operate.

The duration of this initial phase of the epidemic is clearly uncertain, but densities will rise as restrictions are lifted. However, employees will have got used to the current lower densities and may be less prepared to work in high-density environments. As the role of the office changes, densities are likely to be permanently lower than the pre-COVID-19 norm.

The COVID-19 crisis is likely to drive a more rapid and permanent shift towards working at home, accelerating a trend that was already emerging. Employees are now getting used to the technology, and companies have been forced to trust their staff to do this.

Although the experiences of employees will have been very mixed over the lockdown period, most will have seen at least some positive aspects. Many companies will have seen that productivity can actually be enhanced. All this will require, and hopefully foster, a higher level of trust between employees and employers.

Where there may have been an initial ‘stage fright’ towards virtual meetings, it is now reaching the point where many have become very accustomed to them, with employees now able to focus on the topic being discussed in arguably a more concentrated way.

We could now see the end of the traditional rush hour, with commuting on crowded trains and buses giving way to elongated and more relaxed commuting work patterns. This may involve buildings being more genuinely 24/7.

The concept of ‘presenteeism’ now seems outdated. There will be greater personal flexibility around both where and when employees work. Indeed, the government could potentially introduce a right to work from home and companies may actually need to encourage some staff to come into the office for at least some of the week.

This trend will help to free up thinking and idea generation. Creativity could be aided by the availability of more time to think in a quiet and more focused environment than a busy office. Many are probably sleeping longer and wasting considerably less time commuting to and from the workplace.

Transport networks could also be used more efficiently, as many rush-hour commutes shift to off-peak times.

An increase in remote working would clearly signal a decrease in the overall amount of space required per employee. In the short term, the total level of employment will also be lower due to the economic fallout for the COVID-19 crisis.

However, the overall picture is more complex. Office densities are likely to be lower than pre-COVID-19 over the longer term, with an increasing amount of space used for teamwork and collaborative activities (and potentially for other uses such as staff amenities). This could partially offset the overall decrease in space required. In the longer term, a return to employment growth will also help to drive demand

At the corporate level, the change in space requirements will be more nuanced. There will be variation by business sector, and according to the type of function being provided (for example process-driven versus more creative functions).

Initially, firms will experiment in different ways and to different extents, and some will do better than others. However, it is still probable that less space will be required over the long term, with occupiers focussing on prime city centre properties (although this is caveated in our 10th point) and this will mean more conversion of redundant secondary office space to other uses.

In the short term, many aspects of building design will be impacted. Reception areas may need to be modified to protect those stationed within them. For example, meeting rooms will need to be re-assessed for capacity, cupboard doors in kitchen areas may be omitted, and enhanced fresh air rates could be used. If there is a considerable increase in cycling, most city centre offices will need to expand their facilities, including storage and shower facilities.

Given the likely shift in its function over the longer term, once concerns over COVID-19 transmission have significantly reduced, office design will evolve. It will increasingly need to be inspiring, and address issues with older-style open-plan desk space such as excessive noise and poor interaction across teams. Design will provide more space for collaboration and spontaneous social interaction to encourage ad-hoc creativity. This will be helped by lower densities.

Coronavirus is mainly transmitted by touch, and so a new importance will be given to a touchless environment. Portable technology is already available and can be used as an interface between people and buildings (for example via facial recognition or voice activation).

Smart buildings could come to the fore with a multiplicity of sensors, not only to monitor the comfort of offices and the range of services available but also to sense the temperature of individuals. Social distancing could also be measured by sensors or through mobile apps.

If buildings become more 24/7, this will require building services to be provided smarter and ‘on demand.’

Hygiene is another huge issue, with new frequent professionalised cleaning regimes and the provision of hand sanitisers. However, design may also shift in a more fundamental way. “Hygiene will now be designed-in and this may mean the end of the stripped back exposed services idiom with its hidden dust traps.”

The serviced office model has relied on high occupational densities, and we are now likely to see rise of a new generation of flexible space, based on a lower density. To read our research report on the impact of COVID-19 on the serviced office sector, click here.

Traditional landlords are now likely to offer space on more flexible terms, which could accelerate the existing trend of convergence between the serviced sector offer and that of traditional space. Whilst most office occupiers will demand more lease flexibility in an increasingly uncertain world, some will still be prepared to sign up to longer leases.

Corporate decision makers will increasingly challenge their existing assumptions on how they use their office space and how much they require. They will therefore be assessing their portfolios and balancing the risks, costs and benefits of occupying office space.

Clearly some occupiers will realise the cost savings of remote working and the benefits to employees of more flexible working patterns so some may reduce their floorplate requirements when their leases are up.

However, property costs are a relatively small percentage of company overheads compared to cost of employing staff. Therefore, the financial savings from reducing office footprints may not outweigh the wider costs if this is detrimental to wellbeing and productivity.

Corporates will also be concerned about getting the right working arrangements and practices in place to allow a safe return to work, and ensuring they are operating within Government guidelines.

Spend on environmental issues such as energy efficiency could also fall as a result of less cash being available, and also because building usage will be less intense (with fewer lift movements and less pressure on air conditioning and cooling systems for example).

With more home working, there could be a boom in home improvements, as people adapt their properties to create space to work in. This could include garage and loft conversions and creating garden offices. Employers might potentially provide financial assistance to ensure their employees have suitable workspace. More people might also choose to locate further away from urban centres if they are not commuting as frequently.

More flexible working structures could also have a positive impact on the food & beverage sector, with increased meetings in locations such as coffee shops or restaurants. A number of countries already adopt this attitude to business, and it can create a more dynamic environment, avoiding the need to touch down in the office.

In our assessment, we have assumed that a vaccine or cure is developed within 12-24 months. If this does not happen, then the workplace will change much more significantly. Space utilisation ratios would remain high to maintain social distancing and restrictions on public transport would continue to limit the number of people coming into city centres.

Many of the reasons why offices will continue to be important are those around social interaction. In this scenario, the office would only be used where absolutely necessary, demand for space would fall significantly and the day of the large corporate office could potentially be over. Business parks could come back into vogue, reversing the long-established trend towards city centres.

However, assuming a reliable vaccine can be found, occupiers will still very much favour city centres, with a continued demand for core locations and quality buildings.