The coronavirus pandemic will have enduring effects on the office market such as occupancy patterns and rental values, according to the head of a flexible space firm.
Giles Fuchs, CEO of Office Space in Town, was sharing his outlook for 2021. He said: “The first of these [effects] will be structural impacts on occupancy patterns and rental values as demand for office space reacts to the reluctancy of many to return to a more population-dense environment. There will also be nearer-term economic uncertainty, including a potential recession, which office space providers must be prepared to navigate.”
When it came to Brexit, he said “the outcome of Brexit deal talks, and what deal we get, will affect the economy, in turn affecting demand in the market”. Fuchs added: “With us, hopefully, leaving the worst of the pandemic behind us, office providers will need to understand the potential effects of this deal in order to ensure they have the best post-pandemic recovery possible.”
When it comes to changes to the office environment, he says “we will see some structural shifts in how offices operate moving forward”. Fuchs believes that as people return to work in the new year, “providers will have to alter the way offices function” from “adhering to new safety regulations through altering the layout of the office to maintain proper social distance, to adapting to more flexible set-ups to accommodate the new preferences for hybrid working”.
Fuchs believes that certain office models will succeed. He says “flex space is positioned well to gain increased market share, although density-based models such as coworking will likely suffer”.
He added: “These spaces offer freedom in short-term leases and are able to cost-efficiently facilitate the shift towards a hybrid working model better than the traditional large HQ. Both regional and city flex space will, in Giles’s view, see a surge of demand as businesses look for new, improved ways to run their offices moving into 2021.”