What next for the corporate office?
CV19’s impact on the workplace over the past few months has become an open invitation for anyone with an opinion to come out of the woodwork and share their thoughts on the long-term future of the corporate office.
There’s been deluge of articles predicting what shape the CRE market will take and how it will adapt to the changes brought about by the pandemic. The trouble is, much of what’s been written has been alarmist reaction to isolated stories such as Twitter’s decision to allow its employees to permanently work from home. That’s why we made a conscious decision to keep quiet until the dust has started to settle.
Our view is that rather than creating a revolution in working practices, the pandemic has merely accelerated an inevitable ongoing change that has been happening for many years.
A change of perspective
Lockdown saw the number of people working from home (WFH), almost overnight, shift from around 10% of the UK workforce to more than 50% — and this experience forced many of the firms that were previously resistant to WFH policies to realise that, in general, it actually works.
This has inevitably prompted business leadership to see things through a different lens. As Joe Brady argues in his Forbes article, why now would a CEO choose to spend 9-12% of their cost base on CRE when they could spend 5-6% without significantly compromising business performance? Sir Martin Sorrell, the boss of S4 Capital and former WPP chief executive, has been widely quoted saying that since CV19, he’d rather divert a chunk of his £35m annual property expenditure towards investing in his people.
That might sound alarming to commercial property executives, but the truth is, while most of us value the flexibility and convenience of WFH, we also recognise and have experienced some of the challenges and inefficiencies of working from home full time. We miss the connectivity and productivity an office environment provides.
It’s clear to me that the traditional office isn’t going to disappear — instead, its central purpose will evolve. We will come to redefine the office as a central place we can visit as necessary to meet with bosses, colleagues and clients. But this central core will be augmented by flexible, low-rise regular workspaces, located ‘locally’ outside or on the periphery of major cities where access by private transport is safer and easier, when not WFH. This is becoming known as working near home (WNH).
A new generation of technology savvy workspace companies, such as Andrew Sharp’s Holistica, have already proven migration models that can take organisations on a journey from the traditional fixed office environment to one where over 50% of staff are productively and effectively WFH — all whilst enhancing staff experiences and wellbeing and also improving the bottom line.
When considering how organisations respond to this new environment, we doubt it will impact too many CRE investment decisions that have already been made. We’re likely to see a more medium to long-term migration from traditional long-term leases, towards the use of more no-frills flexi-space providers that offer short-term, subscription-based solutions that can perpetually be aligned with changing business demand.
In anything difficult lies an opportunity
Back in April Microsoft CEO Satya Nadella claimed, as a result of CV19, that “we have seen 2 years’ worth of digital transformation in two months.” In our view, this rapidly accelerated change to working practices has — rather than limit investments in the corporate office — actually served to amplify the business case for more smart buildings systems and a better approach to workplace technology.
As we’ve consistently advocated, technology needs to be at the heart of the building design process for the workplace, not an afterthought. In a world where flexibility is king, more intelligent tech infrastructure is essential, not a nice to have. Consequently, now more than ever, traditional, siloed, manually operated FM/ICT solutions and support contracts will no longer be fit for purpose.
LMG’s holistic multi-technology deployment and support model will give corporate office owners the greater flexibility they now need in terms of how they operate and manage their properties. We are ready to lead the charge with a completely new approach to building technology post-CV19.