What’s been the impact of working from home on the office market?
Wed 01 Jun 2022
One of the greatest impacts of the Covid-19 pandemic was the shift in working behaviour and the move to working from home for a large population of the workforce.
This change became a necessity promoted by the government to deal with increasing Covid-19 patient numbers. The question is, will this working pattern continue, and if so, what will the impact be on the market for office space?
Recent figures from the Office for National Statistics (ONS) show that 84% of employees want to keep up the 'hybrid' system of home and office working. The ONS questioned more than 500 British adults in February 2022. Some 78pc of those who worked from home in some capacity said it provided a better work-life balance, while almost half said it improved their wellbeing.
The office market initially felt the impact of the pandemic and the sudden requirement to work from home, with a significant reduction in transactional activity in the first six months of 2020.
Since then, the situation has improved and the position for Q1 2022 has witnessed an acceleration in Grade A office take-up. This, coupled with the scarcity of available office stock, has meant headline rents have more or less maintained at a pre pandemic level.
That said, the office market is fragile and has reduced by 30% in recent years due to implemented or consented conversions to residential use through Permitted Development Rights.
Occupiers like to have choice and variety, which is difficult to provide in a market with restricted stock. Landlords have tackled this by providing incentives, for example more generous rent-free periods or stepped rents in some cases.
Local businesses now face the task of encouraging employees back to the office, possibly by creating more collaborative space, better access to services and providing a lifestyle that suits the employee.
As firms adopt more agile approaches, offices will become ‘less generic’ and move away from a single-purpose space. They will need to work harder to provide choice and flexibility. We may yet see the ‘flight to quality’ trend where occupiers make the conscious decision to move from older office stock to newer or refurbished offices that provide a better-quality working environment.
It is an interesting time for the office market; a period of change is underway. However, there is certainly still a need for office space, be it a hub or traditional office.
We may see more transactional activity as tenants move towards lease events and they opt to reconfigure their existing space or increase or reduce their footprint.
Either way, we are looking forward to the increased transactional activity that the change in working behaviours will present.
You can contact Anna Smith in Commercial on 01603 629871.
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