Destination collaboration

Working practices have changed massively in the last year or so. Property expert Emily Wood considers the implications for the commercial real estate sector

We didn’t witness the death knell of the office during the pandemic, but our expectations around the workplace have certainly changed. It’s also true that many businesses and individuals have come to value their commercial workplace as a collaborative, social hub that is critical to the culture and the future of their businesses.

DMH Stallard undertook a post-pandemic workplace survey in Spring 2021 as we made our way out of lockdown to see how clients’ and contacts’ workplaces had been impacted by Covid, and what they thought the post-pandemic workplace might look like; we particularly wanted to understand the implications for commercial landlords. Responses came primarily from those in the property and professional services sectors. The majority had occupied offices as tenants pre-pandemic.

More than one third reported a reduction in the commercial workspace they occupied during the year leading to May 2021; some of that was already planned, but more than half of those reducing their space attributed it directly to the impact of the pandemic, and downsizing seemed to go further and faster than originally expected. Nearly one third of respondents believe their workplace requirements will change in year ahead: most, 81%, anticipate a reduction, but an encouraging number, 19%, expect to see an increase.

The return to formal workspaces has gathered pace over the summer. According to our survey, nearly half of workers will be back in a commercial workspace to some degree by the end of September, and 76% by the end of 2021.

Looking forward, 87% of respondents will encourage a form of hybrid working with the working week split between home and office; a substantial number, 27%, acknowledged that some people will not be required to return to the workplace at all.

Businesses and employees recognise the synergies of team working and collaboration in a shared space: over 90% of respondents maintain that there is still a need for commercial workspace. Training and welfare were amongst the key drivers cited for retaining space–key factors that contribute to the culture of a business

Half of respondents are expecting to re-model their current accommodation in order to make it more suitable for agile, flexible, Covid-secure working practices.

“The workplace is still key for culture and engagement… that’s why we’ve redesigned the office to create zones for collaboration, quiet spaces, social interactions.”

Many businesses, 60%, are also returning to workplaces with a growing recognition of the need for greater energy efficiency.

The pandemic has certainly shaken things up, proving that technical support, a flexible mind-set and a little trust can enable many office-based employees to work very successfully from home.

However, it has also reinforced the fact that both businesses and workers appreciate the connection to a physical workspace, and the value of human interactions that enable knowledge-sharing and problem solving; workplaces are key to demonstrating the culture and shared values of many organisations, and crucial for staff wellbeing. There has been an inevitable strain on some landlord and tenant relationships as tenants have fallen into arrears and sought to renegotiate their leases: landlords and tenants now need to collaborate to find a solution to the new ways that many commercial tenants will want to occupy workspace.

Discerning occupiers will be keen to make their space a ‘destination’ that staff want to attend. Fit-out and other services may become part of the package, and the adoption of smart technology (e.g., buildings recognising us via our smartphones) may be what’s needed to establish a competitive advantage.

New leases are also likely to look different: more breaks, shorter terms, and pandemic rent suspension clauses will be on the agenda.

Many tenancies and leases of rented flats and houses prohibit business use, but do they allow working from these spaces? Landlords should check that the terms of any mortgage, superior lease or insurance policy are not being breached.

And noise nuisance claims have increased, with homeowners and tenants working from home more aware of disruption from works being done in common parts, neighbouring buildings or by adjoining flat owners. Developers would be wise to look at future builds in light of changing working patterns.

As long as the workplace offers significant benefits to employers and staff, its future is secure. But expectations and requirements are changing, and landlords and developers must take note.