Modus

Out of office… and never going back?

Modus analyses the results of the latest RICS Global Commercial Property Monitor to find out how the world feels about its office space

Author:

  • Modus staff

31 January 2022

Photo of an office chair in front of an orange tiled wall.

The design of company offices has evolved gradually over the years, ever since the early 20th century when the idea of white-collar office workers was first popularised. New ideas about how to maximise productivity, happiness and wellbeing among employees have come and gone but nothing has shaken things up quite like the COVID-19 pandemic.

In the latest edition of the RICS Global Commercial Property Monitor, RICS members were asked for their thoughts on how the office sector is faring and whether they think office space is still a must-have for any business.

“It is evident from the feedback that we are beginning to see some shift in the way office space is used by organisations reflecting, in part, the move towards a more hybrid form of working,” says Simon Rubinsohn, RICS Chief Economist.  He continues “But it is undoubtedly premature to conclude from this that the office no longer has a role to play, whether in the provision of the more traditional desk workspace or in the creation of environments for effective collaboration. This is clear from the headline global demand indicator which forms part of the RICS Commercial Monitor and is now pointing to a more stable trend in office demand notwithstanding these structural changes.”

Here are four of the questions that were put to RICS members around the world.

 

 

 

Is office space still essential for a company to operate successfully?

(Key: Blue = Europe, Green = Americas, Pink = Africa, Red = Middle East, Yellow = Asia Pacific)

Perhaps the most crucial question for anyone managing a portfolio of commercial real estate: is office space still essential for a company to operate successfully? Nearly two-thirds (64%) of RICS members globally said yes, it is.

Nigeria was the country with the highest percentage of RICS members who felt this way, at 87%. Qatar in the Middle East wasn’t far behind at 81%. At the other end of the scale, just 27% of RICS members in Croatia believe office space is still essential and only 39% in the Netherlands do.

“Some people can work from home, and they’re good and really disciplined. Others do fare much better in an office,” said Mark Dixon, CEO of International Workplace Group, on BBC.com. “Maybe at home there are too many interruptions. Personally, I like to go to an office because if I don’t, I’ll work day and night. Being able to leave the office is an important mental break.” 

Office space is still considered essential for a company by 64% of RICS members.

Are you experiencing an increase in demand for flexible and more local workspaces?

(Key: Blue = Europe, Green = Americas, Pink = Africa, Red = Middle East, Yellow = Asia Pacific)

The vast majority of RICS members (80%) are experiencing an increase in demand for flexible and local workspaces. This was highest in Germany at 94% of respondents. Another European country, Portugal, was just behind on 92%. In Oman however, only 45% of RICS members are seeing an increase in demand for this kind of space.

Writing for the Harvard Business Review, Nikodem Szumilo, a London-based professor of finance and urban planning, and Thomas Wiegelmann, a managing director of Schroder Real Estate Asset Management, believe landlords may be more inclined to help businesses meet these demands. 

“Landlords may be more willing than ever to re-negotiate contracts,” said Szumilo and Wiegelmann. “This means that even those who were locked in long-term deals can now try to rethink the way they use office space.

“Most managers may find that they do not need as much office space as they used to. And the space they do need will work better for employees if it’s designed for a hybrid workstyle and close to amenities and long-distance transport links, as locations in central business districts become less valuable.”

Eight out of 10 RICS members are experiencing an increase in demand for flexible and more local workspaces.

Are you seeing repurposing of office space for other uses?

(Key: Blue = Europe, Green = Americas, Pink = Africa, Red = Middle East, Yellow = Asia Pacific)

COVID-19 has not yet ushered a permanent version of the “office-pocalypse” highlighted by real estate news site Propmodo in the first year of the pandemic. That said, 81% of RICS members say they are seeing repurposing of office space for other uses.

In Austria and Switzerland, every RICS member asked said repurposing of office space is happening to some extent. Across the continent in Eastern Europe, specifically Hungary and Bulgaria, this number was much lower, at 50% and 55% respectively.

In the UK, where 86% of respondents are seeing office space being repurposed, plans were afoot as early as April 2021 to convert offices into homes. A Guardian article reported on plans to create 1,500 new homes in central London, from “offices and other buildings left empty because of the pandemic.”

“Most managers may find that they do not need as much office space as they used to. And the space they do need will work better for employees if it’s designed for a hybrid workstyle and close to amenities and long-distance transport links, as locations in central business districts become less valuable.”

“Landlords may be more willing than ever to re-negotiate contracts. Even those who were locked in long-term deals can now try to rethink the way they use office space.” Nikodem Szumilo and Thomas Wiegelmann, Harvard Business Review

Has space allocation per desk been increased in offices in the wake of COVID-19?

(Key: Blue = Europe, Green = Americas, Pink = Africa, Red = Middle East, Yellow = Asia Pacific)

In 59% of the world’s offices, the space allocated for each desk has been increased, said RICS members. While this is a clear majority, it has by no means become a universal practice. Although in Portugal, where 93% of respondents say space allocation has increased, it’s not far off.

Respondents based in China said only 21% of offices have increased space per desk and in Switzerland only 27%. Although in both these cases, we don’t know if employees already had plenty of space before COVID-19 came along. A JLL survey that Modus covered last year found Beijing and Zurich had close to average occupational densities (before COVID-19) when compared to other cities. Chicago had the most space for each employee (22.8m2) and Manilla had the least (6.9m2).

Want to know more about the evolution of office space design? This potted history on Wired is an interesting read.

 

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