SPR COVID-19 Webinar 1: Impact on the Office Sector
Thursday, 7th May 2020

Don’t write off offices just yet

Since the onset of the UK lockdown late in March there has been much media discussion about the demise of offices.  With the great majority of office workers now continuing their employment relatively effectively from home, will there be any reason to keep using this space at all? The consensus among the panellists at this SPR webinar, the first in a series of four on the potential impacts of Covid-19, was that although office real estate would undoubtedly face a lot of pain in the short and medium term, the benefits of office working should reassert themselves in the longer run.

Bill Page of LGIM Real Estate suggested that the reality for offices was likely to be more nuanced than the media have been predicting. For example, their technological abilities may make younger generations more effective home workers, but they could also be keen to get back to the office if they live in relatively cramped urban accommodation, and online meetings can only go so far in maintaining working relationships. On the other hand, those with longer commutes will have found themselves better off in the lockdown without the need to travel.  As the lockdown eases working densities will need to be lower and health and well-being are likely to rise up the list of requirements for any workplace. 

Jon Hall of Derwent agreed that the return from lockdown is likely to accelerate occupiers’ focus on health and well-being qualities of the workplace, even if the FT recently suggested that most firms’ primary concern will be pure survival in the first instance.  He did however stress that conditions for employees when travelling to work – rather than in the office itself – will probably be the key issue for firms as the lockdown eases.

There could however also be health and well-being issues for those working from home, according to Elaine Rossall of JLL.  For example, the ergonomics of their seating and their use of technology may not be ideal for physical well-being, while there are also the mental effects of isolation from colleagues to consider. And homes tend to be energy inefficient and contribute more to carbon emissions than office buildings, an issue that may get more attention once climate change moves back up the agenda.

‘The office isn’t going anywhere,’ insisted David Kosky of flex office providers Work.Life, but he stressed that occupier trends towards reducing their footprint and getting more agile in their use of space are likely to accelerate in the wake of Covid-19.  In a wider discussion of leasing conditions, particularly in the Central London market, which always tends to be more volatile, there was a suggestion that the crisis could further occupiers’ quest for greater flexibility in terms of lease lengths and break options.

In a polling question from meeting chair Tom Duncan of Mayfair Capital, most of the online audience said they would favour a combination of home and office working once relative normality returns – suggesting that there should still be substantial demand for office space from property researchers in the longer term– even if it is used somewhat differently than in the past.

Tim Horsey