End of the office predictions premature
Peter Fraser on the sector’s positive post-covid reponse – a chance to pause and reset
Change for the commercial property sector was heralded almost overnight in March 2020 with the onset of the Covid-19 pandemic and its impact on businesses.
Interestingly, several projections were made throughout the year about what the future for offices may look like. The initial negative stories grabbed the headlines, but for me 2020 has brought many positives to a marketplace which has been traditionally slow to embrace change, resulting in an escalation of a number of existing market trends.
In a year of great turmoil and uncertainty, the relationship between landlords and tenants has improved. It had to, as many agreed bespoke rent arrangements to help with business cashflows and survival. That dialogue has extended and brought greater engagement, with landlords looking to incorporate tenant requests into how they operate and develop their buildings – particularly around health and wellbeing.
Indeed, the desire for sustainability has been brought much more to the fore. While often considered a “nice to have” before the pandemic, sustainability is now increasingly driving real estate design, strategies, and property choices. This is on a number of levels from sustainable ratings; heating/ cooling systems; building materials and staff travel options, to highlight just a few.
Office lay-outs and finishes have been evolving with different sectors demanding different things – with “touchdown” spaces, client lounges and collaboration zones becoming common.
In a war for talent and looking for ways to encourage staff back to the office, the working environment will be key to achieving both goals. The need to nurture business culture and – for some – having areas for team working will result in unique office environments for staff.
The drivers behind most
“Sustainability is now increasingly driving real estatedesign,strategies,andpropertychoices”
2020 office relocations have been “right-sizing” and securing “best in class” space. The war on talent is a key driver in real estate decisions and this is notable when analysing the take-up of prime spaces – 2020 actually saw an increase in Grade-a take up and an increase in Grade-a rents.
So it would appear that news of the death of the office was over done. Avison Young’s latest Big Nine Office Market analysis estimates that 2020 take-up for Edinburgh city centre was 473,000 sq ft, which is more than 100,000 sq ft greater than in 2019 and 17 per cent down on the ten-year average. In a year which saw only 11 transactions recorded in Q2 when the pandemic took hold, that’s quite remarkable.
There are of course many other drivers and influences but these are some of the key areas which will shape the post-covid office world. I think it will be an era of more bespoke office spaces reflecting a more balanced model of home/office working, which I believe will lead to increased productivity and job satisfaction levels.
So no, 2020 did not see the end of the office; it has instead allowed the sector to pause, reset, and align itself with the needs of businesses – a rebirth rather than a death.