UK & Europe
UK Real Estate Insights
Since March 2020, we have received different, and sometimes confusing, messages from the government as to remote working. Following the end of the first lockdown in England, there was a push from the government to get employees back to work and, although it was nothing like pre-coronavirus numbers, the percentage of people travelling to their normal workplace increased. However, when the third lockdown was announced in January 2021, the government once again firmly instructed the nation to stay at home, meaning employees should only go to work if they cannot reasonably work from home.
In this blog we consider the impact the COVID-19 pandemic has had on the traditional workplace model and what this means for the real estate industry and, in particular, real estate investors.
The COVID-19 pandemic has undoubtedly triggered an enormous shift in work culture and after working from home for such a long period some businesses have grown comfortable with it. As such, even once the current “stay at home” restrictions lift, it is probable that some form of remote working (at least for office-based workers) is here to stay. Of course, one size doesn’t fit all and there will be businesses where home working is inappropriate. For those businesses where it does work, or where homeworking is necessary to comply with government lockdown rules, our advice is to conduct appropriate health and safety risk assessments and put in place suitable working from home/flexible working policies.
This shift in workplace culture is already having a significant impact on the real estate industry, with potentially adverse consequences for investors. A large-scale office building has long been considered the hallmark of a truly successful company, but with remote working fast becoming the "new norm", occupiers are looking at other options. For example, Deloitte announced last year that it would be closing four of its UK offices and moving 500 employees to permanent remote working roles.
So is it all doom and gloom from hereon for real estate investors? Some commentators certainly do not think so.
Instead of predicting a somewhat depressing future of un-renewed leases and strangely empty office spaces, CBRE anticipates in its Global Outlook 2030 Report that from 2030 almost all employees will be mobile and, as such, will need a "network of locations" from which to work. To accommodate that, the design of office workspaces will also need to change to encourage face-to-face interaction, increased collaboration and support creativity. Employers will have to think about their culture and internal brand and how they can curate that with employees working more agilely. These predictions are echoed by other key players in the real estate industry. As Michael Berretta, VP of Network Development at IWG observes, "unwieldy, long-term real estate contracts are simply not possible for agile companies – the landscape has changed dramatically."
So, while no-one knows exactly what a post COVID-19 world will look like, one thing seems certain for the real estate industry: investors and occupiers should be prepared for a move away from the traditional work-place model and ensure they are in the best position to respond to this shift in culture.