For the commercial real estate sector, like most industries or markets, the pandemic has had a profound impact. This is particularly telling when looking at office buildings.
In fast-tracking the flexible work movement, the pandemic has forced employers to re-evaluate their policies and practices. How they work, when they work and where they work. Naturally, sat at the heart of this debate is “the office”; what do they want and need from a physical workspace, and how do they expect their staff to engage with it.
Knowing the answers to these questions is vitally important for office landlords. Some will have seen their offices, or even entire buildings vacated, leaving them wondering how they will attract new tenants.
In December 2021, infinitSpace commissioned an independent study among 200 UK office landlords. Over three-fifths (64%) said they have witnessed a notable shift in the demands of existing and prospective tenants since the start of the Covid-19 crisis, with 62% struggling to attract prospective tenants to fill “traditional office spaces”.
Creating the exceptional
“Companies will need to seriously up the ante with in-office perks in order to entice employees to stay or return to the office full time,” career coach Ashley Stahl recently wrote in Forbes.
The underlying message is that, as Covid restrictions are peeled away and many employers hope to see their staff head back into the office, they must present them with great reasons to do so. Many people have enjoyed the freedom and flexibility of remote working.
Indeed, a recent European study found that the majority (67%) of UK office workers are reluctant to return to the office post-Covid. Most (78%) employees would like a workspace within ten minutes of their home, while 93% want to see improvements to their organisation’s workplace.
Businesses must make it worth them braving the commute once again. Or, perhaps more accurately, office landlords must do so.
Office landlords have to focus on creating workspaces that best suit the end user; as employers carefully consider how they can get people back to the office, they will be seeking exceptional workspaces that will entice people away from their home workstations.
Simply put, a room filled with desks and a communal kitchen with a kettle, microwave and fridge will not suffice for many companies. So, landlords must ensure they have a more compelling proposition.
The rise of flexible workspaces
In light of organisations’ changing demands, landlords are increasingly looking to create flexible workspaces. A very broad term, this essentially means creating workspaces that offer a greater variety of uses, services and facilities.
For context, infinitSpace’s aforementioned research found that, at present, UK office landlords are dedicating an average of 33% of their office portfolios to flexible workspace. By the end of 2022, this is predicted to increase to 37%. By 2026, it will hit 44%.
Investment into transforming traditional offices into flexible and co-working spaces is, then, likely to increase quite significantly in the years to come. That is useful to know; however, as stated above, ‘flexible workspaces’ is a broad term. More detail is required.
65% of UK office landlords said that the rise of remote working during the pandemic had forced them to reconsider the layout, design and functionality of their office buildings. Crucially, we were also able to ascertain exactly what they were prioritising.
52% of landlords have added new facilities to their buildings to enable their tenants to collaborate more effectively when they do head into the office, such as additional breakout areas and meeting rooms. 62% have introduced facilities to aid tenants’ wellbeing while in the office. Examples include gyms, meditation and relaxation spaces, and mental health support services.
Encouragingly, 63% of landlords said their office buildings have an app or online platform that tenants can use to manage their workspace and book meeting rooms or facilities.
What the tenants wants
Clearly, changes are afoot. And it’s promising to see so many landlords taking positive actions to ensure their office buildings – or at least dedicated spaces within them – are tailored to tenants' demands for flexible working.
But, creating a new flexible workspace can also seem a daunting prospect to many landlords. What should it look like, how should it function, and what facilities should it offer?
infinitSpace’s research answered some of these key questions. Namely, we asked UK office landlords about which features are most important in attracting tenants today.
This is what they said:
1. Meeting rooms (60% of landlords said this feature is ‘very important’ or ‘somewhat important’ in attracting tenants to a workspace)
2. Breakout areas and collaboration spaces (59%)
3. Outdoor space, such as a garden, terrace or balcony (58%)
4. In-house food or café (56%)
5. Networking events (54%)
6. Barista coffee (54%)
7. A workspace app (53%)
8. Flexible fit-out & furniture (53%)
9. Hotdesking (52%)
10. Gym (51%)
11. Self-catering facilities (50%)
12. Bike lockers (50%)
13. Bar or drinks (48%)
14. Showering and changing facilities (43%)
The findings point towards businesses wanting a more open, collaborative experience for their staff on days when they are in the office. This makes sense; if employees only travel into the workplace two or three times a week, it is likely that those days will be spent engaging with colleagues, sharing ideas and addressing issues, with the remote working days spent on more siloed or individual tasks.
The office must now be a hub of creativity, innovation and collaboration. This will require different facilities, designs and layouts.
These were all key considerations for infinitSpace as we launched our first London workspace earlier this year – beyond Aldgate Tower is focused on delivering an exceptional experience, rather than a desk and a chair.
Networking opportunities, events, open spaces, food and drink options, member apps, and high-spec fit-out. These are no longer things that are “nice to have”; they are essential to many organisations and their staff.
Without a doubt, the pandemic has accelerated the pace of change within the commercial real estate industry. It will be fascinating to see how office buildings evolve in the months and years to come in response to the new demands of tenants – I am confident it will result in more creative, progressive and human-focused spaces, and the industry will be better for it.
