Organisations are scrambling to consider a new way forward when leasing property, Graeme Davies says.
Right now businesses the world over, especially those with huge shiny offices, are scrambling to rethink how the world of work will change as we adjust to the ‘new normal’. Certainly those of us who have spent the past five months working almost exclusively from home have realised some of the benefits of remote working and many intend to continue spending at least some of the working week at home in the future.
Indeed many businesses are already letting out space in their offices and planning for smaller central hubs where employees may only spend part of the week – all part of the effort to maintain company and team culture and capture the value of those ‘watercooler moments’.
Evidence from within the industry backs up the sense that a structural shift is underway. Only a few months ago companies such as WeWork and IWG were big news as we talked about the exponential growth of funky short-term city centre-based workspaces replete with baristas and pool tables and occupied by start-ups and millennials.
“For FMs who relied on big ticket office contracts, times are going to get a lot tougher”
The recent shift has been dramatic. IWG reports that it has seen a surge in demand for short-term flexible office space in the suburbs of cities such as Manchester and Birmingham while city-centre demand has cratered. One of the most telling illustrations of the demise of the city centre workspace is the recent collapse into administration of TechHub, which was once the epicentre of east London’s cluster of technology enterprises. Partly a victim of its own success as rents soared in Shoreditch, the Covid-related lockdown finished it off as demand for space melted away when workers fled to their kitchens and spare bedrooms.
The government has also lamented the ghost town city centres caused by the absence of city workers as ancillary businesses such as sandwich shops, restaurants and pubs have been hit hard by the lack of their traditional custom.
This is not going to change in a hurry with city centres likely to remain quiet for the rest of the year and potentially subdued in the long term.
For FMs who relied on big ticket office contracts, times are going to get a lot tougher. Even post-Covid, the role of the shiny head office in most companies has likely changed forever. Many companies are facing up to a future with hybrid ‘distributed’ workforces that may meet in a central office once a week or so. FMs who can handle this sort of logistical nightmare may still thrive and the organisation and cleaning of offices will have to be a lot more regimented – but the overall market probably faces a prolonged period of shrinkage as we all adjust to the ‘new normal’.
Graeme Davies writes for Investors Chronicle