Re-imagining the future of the office: Now is the time to take flexible working to the next level

Re-imagining the future of the office: Now is the time to take flexible working to the next level

The future of the office faces greater uncertainty today as the role of the office is being questioned and compressed in several directions.

Businesses have had a chance to trial remote working and found the practice largely successful; costs can be cut by scaling back traditional office-based working without compromising productivity for the most part. 

SJP and Columbia Threadneedle property funds emerge from suspension but others ‘could take months’

Many large companies, particularly in the technology sector, have already made commitments to working from home, and Twitter, Facebook and Square have announced staff will have the option to do so indefinitely. 

Research from PwC shows that both employees and employers believe productivity has increased as more people have been working from home.

However, there are good reasons to expect that office demand will rebound, albeit unevenly. While employees have finally achieved their wish for more flexible working, in an ironic turn of events, many have discovered they miss the sense of community and meaning that the office provided.

Working-from-home fatigue has frustrated parents and young thrusters pushing for learning opportunities and FaceTime with superiors. 

Professor André Spicer, from City University’s Cass Business School, argues while a significant reduction in the amount of time that people spend in the office is likely, home workers may be at a disadvantage as they risk getting overlooked and may struggle to get promoted over office going peers. 

Surveys show there is a slight disconnect between the purpose of offices as viewed by employees versus employers. 

Employees prioritised collaborative and developmental opportunities whereas employers also viewed offices as important for maintaining company culture. 

We believe an effective office encompasses both views. As global lockdowns are lifted and vaccines deliver a return to normality, we expect office demand to rebase lower in the short-to-medium term and limit occupancy and effective rent levels.  

The future

Looking ahead, many office markets and sectors should start to trough in 2022 as occupancy levels begin to stabilise.  

We do not have great visibility on the timing of these early stages of recovery as much depends on the appetite for space by corporates as their workforces emerge from the Covid pandemic.  

Some segments, such as life science, have continued to experience strong leasing activity during the past year, while others, such as commodity space users in central business districts have mostly paused their leasing activity.

RLAM appoints head of property from CBRE

We also expect greater flexibility in lease structures to grow in popularity within the office sector as landlords seek to accommodate more fluid tenant demands.

As such, businesses have three clear paths ahead of them: to return to pre-pandemic office use, to establish a ‘new normal’ with offices set up as administrative hubs while encouraging more flexible working, or to make a long-term commitment to multipurpose office communities. 

If the hub model sees widespread adoption, we are likely to see fewer long-term, centralised leases; flexibility will be key, and businesses will prioritise the ability to scale up or down rapidly in line with needs. 

Better travelled employees with increased freedom would spend more time away from the office utilising remote working technology that will become increasingly frictionless. 

HMRC weighs ISA ban on ‘new’ property fund investments

A PwC survey conducted in January 2021 showed that tools for virtual collaboration and the IT infrastructure to support those tools were the two highest planned categories of investment according to US executives (see chart below)

The last of these three categories takes flexibility to an extreme where offices as we know them are replaced with club-based models, perhaps with multiple smaller businesses pooling resources to benefit from a more comprehensive supportive community. 

Such organisations would be attractive to employees, with many desirable amenities, and companies wanting to attract the best talent would be keen to meet increasingly high standards.

Founder of Patchwork Mikael Benfredj believes these new ‘super offices’ would also be easy to standardise and regulate in line with inevitable increasing scrutiny around things such as lighting, chair comfort and screen hours. This model is perhaps more likely for smaller businesses than for larger corporates.

Tech giants

Tech superpowers such as Apple and Samsung are, of course, way ahead of the game. 

Samsung City in Seoul and the Apple Park in Cupertino are already vast communities. Samsung City caters for the every need of 35,000 employees, and the Apple mothership has cost the company $5bn to construct. 

Property investors remain cautiously positive amid value and income decline

If we are to view them as trailblazers – the canaries in the coal mine of the office sector – then the role of the office looks bigger and greener but more immersive and invasive. 

A socio-cultural shift is imminent and, once again, we are all faced with the same decision: will it be the big tech model of convenience, or freedom?

Andrew Parsons is CIO and founding partner of Resolution Capital, which runs the Nedgroup Investments Global Property fund

The future of the office faces greater uncertainty today as the role of the office is being questioned and compressed in several directions.

Businesses have had a chance to trial remote working and found the practice largely successful; costs can be cut by scaling back traditional office-based working without compromising productivity for the most part. 
SJP and Columbia Threadneedle property funds emerge from suspension but others ‘could take months’
Many large companies, particularly in the technology sector, have already made commitments to working from home, and Twitter, Facebook and Square have announced staff will have the option to do so indefinitely. 
Research from PwC shows that both employees and employers believe productivity has increased as more people have been working from home.
However, there are good reasons to expect that office demand will rebound, albeit unevenly. While employees have finally achieved their wish for more flexible working, in an ironic turn of events, many have discovered they miss the sense of community and meaning that the office provided.
Working-from-home fatigue has frustrated parents and young thrusters pushing for learning opportunities and FaceTime with superiors. 
Professor André Spicer, from City University’s Cass Business School, argues while a significant reduction in the amount of time that people spend in the office is likely, home workers may be at a disadvantage as they risk getting overlooked and may struggle to get promoted over office going peers. 
Surveys show there is a slight disconnect between the purpose of offices as viewed by employees versus employers. 
Employees prioritised collaborative and developmental opportunities whereas employers also viewed offices as important for maintaining company culture. 
We believe an effective office encompasses both views. As global lockdowns are lifted and vaccines deliver a return to normality, we expect office demand to rebase lower in the short-to-medium term and limit occupancy and effective rent levels.  
The future
Looking ahead, many office markets and sectors should start to trough in 2022 as occupancy levels begin to stabilise.  
We do not have great visibility on the timing of these early stages of recovery as much depends on the appetite for space by corporates as their workforces emerge from the Covid pandemic.  
Some segments, such as life science, have continued to experience strong leasing activity during the past year, while others, such as commodity space users in central business districts have mostly paused their leasing activity.
RLAM appoints head of property from CBRE
We also expect greater flexibility in lease structures to grow in popularity within the office sector as landlords seek to accommodate more fluid tenant demands.
As such, businesses have three clear paths ahead of them: to return to pre-pandemic office use, to establish a ‘new normal’ with offices set up as administrative hubs while encouraging more flexible working, or to make a long-term commitment to multipurpose office communities. 

If the hub model sees widespread adoption, we are likely to see fewer long-term, centralised leases; flexibility will be key, and businesses will prioritise the ability to scale up or down rapidly in line with needs. 
Better travelled employees with increased freedom would spend more time away from the office utilising remote working technology that will become increasingly frictionless. 
HMRC weighs ISA ban on ‘new’ property fund investments
A PwC survey conducted in January 2021 showed that tools for virtual collaboration and the IT infrastructure to support those tools were the two highest planned categories of investment according to US executives (see chart below). 
The last of these three categories takes flexibility to an extreme where offices as we know them are replaced with club-based models, perhaps with multiple smaller businesses pooling resources to benefit from a more comprehensive supportive community. 
Such organisations would be attractive to employees, with many desirable amenities, and companies wanting to attract the best talent would be keen to meet increasingly high standards.
Founder of Patchwork Mikael Benfredj believes these new ‘super offices’ would also be easy to standardise and regulate in line with inevitable increasing scrutiny around things such as lighting, chair comfort and screen hours. This model is perhaps more likely for smaller businesses than for larger corporates.
Tech giants
Tech superpowers such as Apple and Samsung are, of course, way ahead of the game. 
Samsung City in Seoul and the Apple Park in Cupertino are already vast communities. Samsung City caters for the every need of 35,000 employees, and the Apple mothership has cost the company $5bn to construct. 
Property investors remain cautiously positive amid value and income decline
If we are to view them as trailblazers – the canaries in the coal mine of the office sector – then the role of the office looks bigger and greener but more immersive and invasive. 
A socio-cultural shift is imminent and, once again, we are all faced with the same decision: will it be the big tech model of convenience, or freedom?
Andrew Parsons is CIO and founding partner of Resolution Capital, which runs the Nedgroup Investments Global Property fundRead More– Investment Week

We offer dedicated services to multiple families to support their unique financial and legacy objectives. Our offering is comprised of customised solutions provided by advisors who have high-quality, proven expertise in wealth management and financial planning.

  • phone
  • email
  • address