KEY THOUGHTS FROM THE ACRE OFFICE TEAM
‘The pitfalls and benefits of home working have been highlighted – we believe the office is absolutely here to stay but the metrics for success will see fundamental change over the next decade’
The ACRE Team
- Fundamentally we are social creatures and enjoy others’ company.
- Relationships / daily interactions are critical to individual’s well-being.
- Face-to-face interactions and ‘coffee-point’ conversations spark ideas and business initiatives.
- Working from home has been reliant on social capital built up to date.
- Increased community awareness – expect relationships with neighbours / nearby occupiers to flourish.
- Sustainability agenda sidelined in short term and likely to rebound – issues of well-being / environment on people’s mind more.
- Home working can provide balance to the working life yet separating ‘work’ and ‘life’ creates a work-life balance! The concept of ‘never-ending work’ enabled via portable mobiles & laptops is heightened by the pandemic.
- Expensive to support all to work from home and need to make provisions for IT and HR support for example, on longer term basis.
- Increased pressure on UK Government to invest in broadband speed.
- Increased on-shoring – issues of outsourced 3rd party IT services highlighted e.g. shutdown in India has been a huge problem.
- Upscaled technology skills e.g. video conferencing, will be complementary not a replacement in some instances.
- How people travel to and from work will be an increased factor in decision making. Will people want to travel on congested trains / tubes?
- Forecast increased modernisation and flexible / hybrid working environments i.e. split office-home time, adapted approach to suit personalities and roles as opposed to carte blanche policy.
- Focus on well-being and health to influence office specifications & amenity provisions. Expect intensification of corporates investing in their HQs to create brand hubs and social collaboration centres.
- London and city cores are dense and operations heavily disrupted. Will businesses reconsider relocating to more cost effective / cheaper / decentralised options?
- Conversion of retail and other space with opportunities to increase office (or residential) supply where demand is highest.
- A stall in construction will exacerbate a supply shortage of offices. Whilst the sector is expected to be one of the first to start up again, it will need to navigate a fractured supply chain, reduced labour availability and higher costs.
- Strong case for occupational densities to decrease – could this offset economic impact on demand for offices?
- Significant headwind in the economy is leading certain businesses to seek rent holidays / delays; however, whilst not immune, the office sector is more resilient than other sectors particularly F&B, retail and leisure sectors. The June rent payment date will be even more of a milestone than March.
- What will the impact of Brexit be – double hit?
- The service office sector will see disruption and failures but will retain a key role in occupiers’ portfolios and rebound as flexible working trend is sped up by Covid-19. Short-term potential shrinkage in pool of SMEs but mid-term many others will be formed. Will the key players’ dominance of the sector grow?
- Occupiers will reassess strategy which will impact on lease lengths. Potentially longer leases to be agreed with covenant underwriting in core locations in return for increased incentives. This will need to be balanced with flexibility elsewhere in the portfolio. Expect rebound as requirements re-activated.
- Increased acceptance of home working can provide employers with a wider talent pool.