Following our webinar on July 30th, for all those who were able to join us, and for those who couldn’t make it, below are some key insights from Kara Carter, Creative Director at Spacelab, Christopher Aquilina, Director and Chartered Surveyor at Spring4 and Alex Woolf, Strategy Director with Romulus.
Working from home is a temporary fix that companies will probably have to reverse.
CA: We can temporarily operate very well remotely because we have sat side-by-side with colleagues and know how the team works together. Most companies have built up extensive social capital such as this over many years but that is being used up while we work apart. As new people join a business they will do so with no access to that historic well of face-to-face interaction. It is particularly challenging for new graduates entering the workplace. So much of the learning that is needed in the professional world is achieved by osmosis in the office. If extensive working from home is to endure in some form, companies will need to take account of its shortcomings and find ways to boost learning and information sharing.
There is a huge appetite for WFH and it has boosted employee trust.
KC: New working practices are clearly aspired to and there is a big appetite for increased working from home in future. Employers will need to respond to this demand, otherwise they could lose talent. Spacelab’s survey results show that pre-lockdown, on average, 59 per cent of people ‘never’ or only ‘occasionally’ worked from home. But 72% of people would like to work from home at least two days per week in future, and 43% at least three days. This employee demand is driven in part by the finding that 79% feel their employer will trust them more to work away from the office post-lockdown. Trust (or the lack thereof) has been a barrier in the past, but with the majority of us having to work from home under lockdown, everyone has had to be more trusting of each other. This will hopefully have lasting effects: the development of stronger working relationships and more empowered, autonomous team members.
Workplace design will respond with physical changes and even a resurgence of neighbourhood offices.
KC: With people in the office less, our workplaces will need to evolve with creative use of the space traditionally given over to desks. The workspace can provide more generous areas for people to gather and socialise; for team catch-ups and town halls; for training in pairs or groups; to concentrate on solo tasks if their home doesn’t provide a great space for this; and/or to work on other activities. Meeting pods, creative hubs, call rooms and quiet areas will enable a more agile workforce to be productive when in the office.
All this has interesting implications for the property industry. We may see a resurgence of the regional office, but there are also some new hub-and-spoke or neighbourhood real-estate models that may emerge. These workspaces would offer new places for employees to work near their homes, avoiding the challenges of home disruption and poor home office set-ups.
Engage with your landlord if you think you’ll need less space, subject to being properly advised.
CA: It may be early, but if you think you need less space, it is often worth engaging with your landlord first. They may be aware of another party in the building that is looking to expand, which might allow for an early exit. The landlord may even want the building back to redevelop, particularly where conversion to residential use is possible. Otherwise, the normal disposal routes of underletting or assignment are going to be challenging in what is likely to be a weak market. Vacancy rates across London are reasonably low, however an economic recession normally results in an abundance of ‘grey space’ (unused accommodation under lease) flooding the market. There are very few organisations talking about taking more space and marketing unwanted offices to let may not yield immediate results.
Some occupiers, driven by the need to reduce costs and accommodate more home working, may be willing to share their space with partners or complementary businesses. Subject to this being achievable under the terms of the lease, sharing premises could be another way to mitigate costs.
KC: For those businesses who are unable to shrink their space or who don’t want to act too quickly, there are other ways to make their offices continue to work hard and even generate income. For example, if you have a large social area or meeting suite, see if small changes would allow you to hire them out to external companies. Or consider consolidating other sites you have in your portfolio.
AW: Engagement with your landlord may result in an opportunity to work through an early exit or downsize that is in the long-term interest of both parties. As Chris mentioned, there may be other companies in the building looking to expand or even a potential redevelopment opportunity that the landlord is considering.
Landlords should be open to compromise on lease renewals.
CA: No doubt many companies with lease breaks or expirations in the next 6-12 months will be thinking very carefully about whether they need an office, but organisations must be alive to the danger of deciding prematurely that they can do without. My recommendation is that landlords should be open to the compromise of short-term lease renewals (12-18 months) or to including additional lease breaks in the existing lease as a quid pro quo for occupiers not breaking now. This potentially defuses the situation where tenants end their relationship with the office too soon without really having enough data or sufficient experience of what it truly means to operate an entire organisation remotely.
Investors need to make buildings more attractive to occupiers post-pandemic.
CA: The cost of corporate real estate is under scrutiny and efficiency of occupation is critical. How often are large meeting rooms used by two people or even a solitary person making a telephone call? In some European markets the landlord provides communal meeting facilities and this would go a long way to making offices more efficient for occupiers if the trend were imported into the UK.
Another way of increasing attractiveness is the provision of bike racks, lockers and showers. Awareness of climate change and the importance of healthy lifestyles was already changing our commuter behaviour. Now, no matter how ‘Coronavirus safe’ an office is, if the employees have to commute on a packed train then the risk of infection remains. London has fantastic cycling infrastructure and it is likely that more people will look at personal power as an alternative to rail.
AW: Workspace owners must differentiate themselves from their competitors. High-quality space that can be taken quickly and easy, with minimal up-front capex, will be more attractive to occupiers. There will be companies looking to downsize quickly and who are very focused on business recovery. And they won’t want the hassle or cost of taking on expensive fit-outs, long contracts and frustrating wayleave agreements. If there was ever a time for that buzz phrase ‘property as a service’ it is now.
Keeping your office safe requires regular monitoring and communication.
KC: Workspaces are unlikely to be able to accommodate more than 40-50 per cent of their people at any one time to respect the current government social distancing advice. Staggered desk allocation is ideal, with a daily/weekly rotation of group A and group B teams and increased cleaning regimes. Introduce a one-way flow where necessary, restrict access to communal areas, add appropriate signage and hand sanitisers at touch points including doors that can’t be held open. Companies can also reduce meeting-room capacity and encourage stand-up meetings. They can make reception and breakout furniture out of bounds and identify an isolation room that could be used in the event that someone comes down with symptoms at work. Above all, any changes need to be clearly communicated, and companies must keep monitoring government advice and seek help if unsure.
AW: One of the biggest issues in employee safety that we are hearing from our clients is travelling to and from the office. Exploring new and existing cycle schemes and talking to your landlord about increasing the provision for bikes is a good place to start. Additionally, lots of local car parks are offering deals for office workers who can drive in. In multi-tenanted buildings, your landlord will have set up systems and procedures to ensure the safety of your employees and other occupiers. Ensuring that you engage with your landlord and that your office measures work in-step with the building policies will ensure your employees can be kept safe. Regular communication is key because these policies may change over the coming weeks and months. Within serviced office / co-working centres, your operator will have implemented similar policies and measures and should be able to support your team with protective equipment and signage within any private offices.
