SAME OLD JOBS, NEW-LOOK OFFICES

The post-pandemic challenge for employers is no longer to get people back into the office, but to persuade them to stay on

t seems most big global companies Amazon, Meta Platforms, Walt Disney, Goldman Sachs and JPMorgan Chase among them have successfully convinced employees to return to the office.

About 65% of corporate America is back at the office for at least three days a week, according to Fortune magazine. A similar trend is evident in the UK and across Europe.

That’s good news for commercial real estate investors, who have suffered huge income and capital losses over the past three years as a result of the Covid-induced workfrom-home trend. The shift sparked widespread predictions of the “death of the office”. But it turns out brickand-mortar workplaces have survived the onslaught.

Real estate advisory firm JLL says in its latest Future of Work report that 72% of 1,095 corporate decisionmakers surveyed across the globe agree that the office will remain a central part of their operations. But most also acknowledge that a hybrid model working remotely on some days will remain a long-term trend.

JLL’s research indicates that the number of employers worldwide with a hybrid policy increased from 55% before the pandemic to 91%.

“It’s clear that hybrid [work] is here to stay,” says Hannah Dwyer, head of work dynamics research and strategy at JLL for Europe, Middle East & Africa. “Employees expect it, and employers are trying to respond to this.”

She says the stick approach of forcing people to return to the office full-time won’t cut it any more. “If employers enforce four to five days working from the office, 30%-50% of

Iemployees will start looking [for jobs] elsewhere,” she predicts.

In South Africa, a return to the workplace has been unintentionally supported by the country’s deepening electricity woes. John Loos, property strategist at FNB Commercial Property Finance, says: “Elevated levels of loadshedding have disrupted remote work for many, accelerating the back-to-theoffice move.” The pace at which employees are returning to their desks has important implications for the commercial property market.

South Africa’s office sector was already struggling with high vacancies and weak demand before the pandemic, given the stuttering economy. Then came Covid, which resulted in the adoption of remote and hybrid work policies, and which led to widespread job losses. While some tenants opted not to renew their leases as a result, others cut back on office space, propelling vacancies to record highs.

By March 2022, the official office vacancy rate had spiked to nearly 17%, from 11% in December 2019, according to the South African Property Owners Association (Sapoa) and investment firm MSCI.

The last time office vacancies in the country exceeded 15% was 20 years ago (see graph).

In contrast, the vacancy rate of the local retail and industrial property sectors remained below 6% between 2019 and 2022 despite lockdowns and trading restrictions.

The worry has been that more tenants will permanently give up their corporate addresses this year, when rental contracts signed before the pandemic unwind. (Conventional office leases typically run for three to five years.)

But Sapoa’s latest Office Vacancy

Report suggests these fears have been overstated. Vacancies eased to 15.8% in the first quarter.

Though industry players say vacancies are unlikely to return to their prepandemic levels any time soon, given the weak economy and sticky unemployment levels, the recent improvement is an encouraging sign that South Africa Inc still regards the office as integral to its business model.

Niel Harmse, vice-president of real estate research at MSCI, which compiles Sapoa’s Office Vacancy Report, says vacancies in Sandton, the country’s largest office node, dropped to 19.3% in the first quarter, down from 21.2% in mid-2022.

Increased take-up of prime offices new buildings with all the bells and whistles has been especially notable as a result of what Harmse calls a “flight to quality”. For instance, increased demand for top-notch office space in Sandton led to a year-on-year decline

Hannah Dwyer

of almost 300 basis points in prime vacancies to 8.9% in the first quarter.

While the traditional commute to the office is no doubt normalising, industry players warn that people’s expectations of what the workplace should provide have been irrevocably altered.

Real estate investment firm CBRE says in a recent workplace strategy report that while doomsday predictions for the office haven’t materialised, one thing is sure: “Quality workspaces are now a baseline requirement.”

The report reads: “We are seeing a shift from forcing people back into the office to attracting them through design and amenity. [There’s] a shift from push to pull, working to develop the power of the office as a magnet.”

Companies have responded by offering staff incentives to ease the transition from home to office. Investment bank Goldman Sachs, for instance, has introduced free breakfast, lunch and gelato ice cream for returning employees on top of complimentary coffee and an “out of hours” meal stipend.

The offer of membership discounts for gyms close to offices has also emerged as a common perk.

Adrian Davidson, newly appointed head of design for the Europe, Middle East & Africa region at Tétris Design & Build, says the challenge is no longer about bringing people back to the office, but rather focused on “how to persuade them to stay”.

Tétris has recently redesigned workplaces for life assurer Liberty Group, law firm Norton Rose Fulbright and women empowerment nonprofit WDB Trust, among others.

Davidson says companies can’t expect staff to return to the same office they left three years ago.

“Businesses are competing increasingly for highly skilled staff, so companies need to attract and, importantly, retain people by providing a fulfilling workspace experience,” he says.

The focus is now firmly on employee wellbeing, which requires corporate tenants to reimagine the office as a destination for “connection and collaboration”, says Davidson.

Office design has evolved as a result in particular with the introduction of hospitality elements.

Davidson says the post-pandemic workplace basically has to compete with the comforts of home. This has prompted companies to offer a much broader food and beverage element, including baristas, bars and entertainment areas. Leisure amenities such as libraries, gyms and yoga studios, as well as crèches and parenting rooms, are also being added.

When it comes to décor, it’s become popular to introduce local artwork and cultural artefacts to create authentic, people-centric spaces, Davidson says. There’s also a move to modular furniture and acoustic solutions that support multifunctional use of spaces as companies look to shrink their office footprints and save costs.

In addition, sensors and smart technology are set to become non-negotiables to boost real-time decision-making and productivity.

Heather Muller of interior design firm Internal Developers, a division of Cushman & Wakefield | BROLL, says design that incorporates green elements, locally sourced materials and energy-efficient features are now top of mind as businesses look to meet sustainability goals.

The company recently completed a turnkey fit-out for Thebe Investment Corp’s new head office at Growthpoint Properties’ Inanda Greens Business Park in Sandton.

Interior furnishings and fittings in the building draw inspiration from African modernism. Locally sourced stone, marble and timber complement earthtoned fabrics and reflect what Muller calls Thebe’s “deeply rooted” South African history.

She says the tranquil surrounds also support a focus on employee wellness, another important workplace trend.

The office park overlooks the Inanda Club’s polo fields and even has its own nine-hole golf course.