The pandemic altered our ways of working, but offices are most likely here to stay
The onset of Covid-19 has accelerated the adoption of previously nascent trends, none more discussed than working from home and its effect on the workforce and commercial real estate. As the world gradually inches backs to normalcy and vaccine rollouts prove to be effective, we have seen the initial knee-jerk reactions dissipate with multinational firms championing the return of employees back to the workplace. For example, the CEO of Goldman Sachs has signalled his determination to have his bankers back behind their office desks, calling home working an “aberration” that must be corrected “as soon as possible”.
Additionally, many Fortune 500 CEOs are also echoing this sentiment and stressing the limitations of virtual work. These C-suite executives are increasingly raising concerns around loss of peer learning, collaboration, and mentorship, which is almost impossible to replicate virtually due to the lack of interaction and spontaneity that arises when people are physically together. We have witnessed global tech firms such as Google and Amazon pivot from their original positions and emphasise in recent months that while they are flexible to a hybrid workplace solution, the aim is to return to an office-centric culture as they
believe it enables employees to invent, collaborate and be efficient. That said, most global occupiers across sectors agree that they expect to reduce their real estate footprint going forward as they move to a more open arrangement and use technology to manage seating and conference rooms. It is yet to be seen how the increased spacing required due to social distancing will impact the overall office portfolio as this could offset the reduction in total space.
The pandemic also accelerated the adoption of various digital solutions, marking an increase in the technology sector workforce. While many can work remotely, we are witnessing this translate to an increase in spatial requirements as most new office demand now stems from the tech sector in the UAE. Globally, technology and allied sectors are the new major tenants, superseding the financial and service industries. A similar acceleration is being witnessed in the retail logistics sector as online retail penetration increases rapidly – and we expect more players to expand their omnichannel offering – translating to an increased demand for last-mile delivery, fulfilment centres and warehouses.
Due to the ancillary effect of people spending more time at home, we have witnessed the burgeoning commercial real estate trend of dark/cloud kitchens gather pace to become a defined retail segment. This trend has been aided by the technological, logistical and marketing support provided by online delivery platforms such as Zomato, Talabat, Deliveroo and Careem. These shared kitchen concepts allow F&B operators to adapt to the market while keeping their costs lower than a traditional dine-in restaurant. While most existing F&B outlets are now fully operational, the convenience and promotional incentives offered by online platforms suggest that cloud kitchens will continue to perform as an asset class. The commercial landscape has and will continue to undergo changes driven by technology and a workforce with differing expectations. It will become critical for our offices to create a sense of place and an environment that is conducive to creating an effective workforce.