Back To The Office, Or Is It?

Jackie Bennion Deputy Editor 30 July 2020

Back To The Office, Or Is It?

How workers and businesses are rethinking the work space and the logistics of getting workers back into offices which may or may not fit workers' expectations are addressed in several recent sentiment studies.

There has been much debate about if/when and in what numbers workers will return to the office, especially those labelled as knowledge workers, who arguably have the choice. Two sets of survey data out this week shed more light on the situation and what businesses and employees want post COVID-19.

A survey by office space search firm Flexioffices found that 57 per cent of UK businesses are planning to downsize, and within that group 39 per cent want more flexible leases on their premises.

As populations accept the inevitability of living with the virus, the cost and logistics of maintaining office space have become a serious business concern.

The Flexioffices survey of 13 sectors across 10 UK regions found that around half of businesses which own their office space are considering renting next time; and the majority are prioritising reducing capacity and encouraging staff to remain working from home. The largest response rates came from financial services (18 per cent), followed by public sector and retail at 15 per cent.

It also found that London-based businesses are the most likely to move out of the capital, with a third indicating that they were searching elsewhere as a result of COVID-19.

This is supported by data from property consultancy DeVono Cresa showing that demand for commercial London office space fell 30 per cent in the first few months of 2020.

As most of the real estate investment market is concentrated on developing prime commercial office space, how to make it attractive and optimal post the pandemic – for investors and occupants – requires careful thought.

“The pandemic has asked businesses to re-look at office space and include the perspective of how it affects people – their productivity, their wellbeing, how they interact together and engage in positive experiences,” said Flexioffices’ director of business development, Michael Dubicki. "What does the office actually do? Why do we have them? Do we need them?" These are the questions businesses are asking, he said.

Workers are asking similar questions. Only 25 per cent in a recent CISI members poll see themselves returning to their offices for the same number of work days as before the pandemic. Most workers have indicated – in a semblance of normality returning – that they would like at least one day working from home. The Chartered Institute for Securities & Investment, the body representing financial services, also asked its members in June and July about the impact the pandemic was having on business stabilily. Forty-two per cent said they were not sure whether their business would survive six months of COVID disruption, and a majority said it would take 12 months or more for their business and the economy to recover. The pressure on businesses to rethink their fixed costs is enormous.

CISI CEO Simon Culhane called these "truly challenging times" for financial services in re-evaluating the purpose of an office, and some now are focused on using them "primarily for creativity, collaboration and communication rather than a de facto place for work,” he said.

No single approach
Heavy hitters that are bringing back City workers are finding there is no one-size approach. HSBC, Barclays, Lloyds, Morgan Stanley, among others have all indicated that staff have returned, mostly first in trading, sales and essential support roles, but much of the planning to bring back others depends on the buildings themselves.

Those in low-rise offices, such as UBS at Broadgate across 12 floors, or RBS over 11 floors in Bishopsgate, have an advantage over HSBC managing workers across 45 floors in its flagship Canary Wharf office. The same goes for the nearby Barclays tower with 32 floors. Reduced lift capacity, restricted to four or sometimes two people at a time, has been a major challenge for these marquee corporate spaces that are losing some of their lustre. The picture is only worse in New York’s financial district.

Property consultant Colliers International calculates that the typical office space per worker in London is 30 to 40 square feet, which in pre-COVID terms would be costing businesses roughly £8,000 a year per worker at West End rates.

Firms locked into long leases will be feeling the most pain. But reducing space isn’t a binary decision. A top priority for workers returning to “people facing” roles is having more access to breakout areas and communal space, so more space.

“Business owners may need less space if more of their staff are home working and they may need more space for those who are able to come to the office to ensure social distancing rules are observed,” said Graham Harles, CEO of property and construction consultancy Gleeds Worldwide. Either way, “we are going to see competing forces as far as costs are concerned,” he said.

Also, in spite of the prevailing view that workers don’t want to give up the privileges of remote-working and the arrangement has clear cost benefits for businesses, EY research found that two-thirds of employers said that it has been difficult maintaining morale in a dispersed workforce. The World Economic Forum, in assessing the impact of some 2.6 billion people globally working remotely, predicts even more "stress-related absenteeism" in the latter half of the year.

EY's design consultancy group Seren suggests that the pandemic has been less of a home working experiment and more of an experiment in isolated working. After interviewing different sector workers the last couple of months, it cautioned firms about making quick long-term decisions. "We think remote working has proved itself to be productive, however we expect that for a significant proportion of people it’s just not that enjoyable.”

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