This article was first published in City A.M. on May 5, 2020.
As the coronavirus crisis continues to unfold and much of the population adjusts to remote working, many are heralding the end of the office as we know it and trumpeting working from home as the ‘new normal’. But just how viable is the prospect of an office-free future?
History tells us that any vision of a dramatic shift in how we work won’t be that simple. In London, the demand for corporate real estate has always been high–so much so that historically, when financial institutions have reduced their space requirements, other companies, like those in the fast-growing tech sector, quickly take up the space.
For decades, people have speculated about the demise of central offices. We saw this debate with the rise of commuter-friendly fringe business parks, during the development of Canary Wharf and when technology first made working from home possible. While all of these were anticipated to have a detrimental impact on London, to date, none have significantly altered the demand for central city premises.
However, there will certainly be changes post-lockdown. Serviced offices will struggle the most to recover, as their primary customers–small to medium sized businesses–are being hit the hardest. Some businesses are likely to reduce space and operate differently, with remote working now viewed as a more practical option for many. But any reduction in space would need to be substantial to be worthwhile when weighed against the costs associated with any future expansion.
We’re also likely to see a move away from the tightly packed, open plan layouts that have become commonplace since the early 2000s. Instead, many firms will want more space per individual employee, with more private offices, larger meeting rooms and a possible rotation of who uses the space at any one time. However, rather than lessening the demand of large office spaces, this will actually bolster demand, especially for those with large floor plates. As such, those choosing to downsize will largely cancel out the impact of those choosing to upsize.
Finally, we must consider the human need for social interaction. It is clear that many people are suffering without the distinction between work and home during the lockdown, and many miss the face-to-face contact and post-work socials with their colleagues. Professionally too, managers still need immediate access to employees. It’s much harder to get a feel for staff’s behaviour or attitude or conduct business meetings–even with videoconferencing.
The fact is, many of us relish our working hours in central London. The sense of community an office brings and the collaboration and socialisation it provides is very valuable. Consequently, I believe that corporate offices are firmly here to stay.
