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The Future of Office Space

Given the remarkable shift in working patterns that has taken place over the last six months, many business leaders have floated the idea that office space, as we currently know it,  could be soon consigned to the history books. As many as 62% of Americans have worked remotely during the crisis. Three in every five of those employees have stated that they would like it to keep it that way in the wake of a viable vaccine. Thus, it could appear as though this bold prediction could indeed carry some weight.    

The truth of the matter, however, is that office space is going nowhere. This examination will demonstrate that while it’s true that this global experiment in working from home will permanently reshape the role and function of office space, these locations will still prove pivotal for companies moving forwards.

With many corporations now facilitating a safe, flexible return to the workplace, let’s take a look at how the events of 2020 are going to permanently alter the office landscape.

 

Homeworking Fatigue Creeping in

While many cite McKinsey research that points to as many of 80% of homebound workers enjoying their new setup, there are plenty of figures that describe a far less rosy picture. Almost half (41%) of all workers surveyed in a recent Gallup poll would like to return to the office once the threat presented by the coronavirus has subsided. A significant contributing factor to the growing demand for employees to return to their office desks is that their home isn’t conducive to work.

What hasn’t been considered by office space naysayers is that not all home working is created equal. However, the reality is that while some of us have the benefit of a functional home office, this is not the case for the vast majority. Employees without the means to carry out work efficiently from home is an issue in major city hubs such as London, New York, Tokyo or Hong Kong. Here, living accommodation space comes at a premium and very few employees can create a functional workspace for themselves.

It also appears that being cooped up at home without the daily rituals of socialising and bouncing ideas off each other has had some severe knock-on consequences to employees’ mental and physical health. In the UK, Bupa, the private healthcare provider has reported that workplace psychologists are fully booked for virtual consultations. Enquiries to its health and wellbeing advice line have also surged 300 per cent as the coronavirus crisis unfolded. Similarly, a survey of 500 home workers by the Institute for Employment Studies found that a third of respondents were eating less healthily, with 60% admitting to doing less exercise. Furthermore, 64% reported problems sleeping due to anxiety, 48% worked longer days, and a third felt lonely. These are hardly the statistics of a happy and productive workforce. Rather, they point to a myriad of problems developed as a result of leaving the office behind.  

 

Office Space Helps Build the Human Element

The vast majority of these adverse health effects are caused by a lack of social interaction. In that regard, the office will never disappear as the hub of interaction and relationship building since video conferencing solutions such as Zoom and Microsoft Teams cannot, and will never, replace the stimulation of in-person company.

According to a study by Forbes, 85% of individuals surveyed stated that they build stronger, more meaningful business relationships during in-person meetings and conferences than they do in remote settings. Work undertaken by the Harvard Business Review drew similar conclusions, finding that 95% of people say face-to-face meetings are a critical factor in successfully building and maintaining long-term business relationships. It seems there’s no escaping the fact that face-to-face meetings establish stronger relationships, cement social bonds, and build trust among team members. The office is the only environment that gives the opportunity for such effective face-to-face meetings to take place. 

 

Office Space Adaptation Required in a COVID World

The question for companies, therefore, will not be whether or not to ditch the office. Instead, the challenge business leaders will face is how to adapt office space to meet the needs of workers in a COVID world. 

Even though the office cubicles reminiscent of the eighties have long gone, the open-plan tech-friendly spaces favoured by many startups will have to be reimagined once again. Offices may soon become organised based on the type of work being done, rather than who is undertaking it. The concept, known as ‘activity-based working,’ originated in the Netherlands but has since secured footholds in Australian and American markets. Pioneers of the movement include advertising agency Partners & Napier. The company (which is headquartered in Rochester, NY) has created collaboration rooms, hot desking zones, and communal breakout areas to provide three viable locations for each employee to carry out their given duties. Thus, it appears that future office layouts will be dictated by the type of work being undertaken, rather than the function or position of an employee. In these new circumstances, CEOs rubbing shoulders with lowly interns in the office environment would become commonplace.       

Given the economic challenges the pandemic has posed to many companies, the office may change its purpose from providing day-to-day workspace to a place for meeting and collaborating instead. The move would fulfil the dual purpose of cutting costs while better serving their employees’ needs. With real estate costs representing the highest personnel-driven expenditure behind compensation for many organisations, research undertaken by McKinsey earlier this year has suggested that companies could cut their real estate costs by as much as 30% by reorganising their office space infrastructure.

Interestingly, many of those efficiency savings will be achieved while increasing the overall office footprint. Many companies will look to ditch expensive city-centre offices, and instead opt for a ‘hub and spoke’ network of small regional offices in the suburbs, with a smaller city-centre presence. The latter scenario is the basis of a $390 million bet being made by the owner of leading flexible office space provider IWG, Mark Dixon. At what may seem a counterintuitive moment to be expanding within the office space sector, he’s hoping to gain first-mover advantage on the modern, flexible WFH arrangements of the future. The data suggests he might be onto something. Even before the crisis, flexible space solutions’ share of the US market (3%) had been growing at 25% annually for the past five years. So it’s not a case of the pandemic altering the future of office space. Instead, the coronavirus outbreak appears to have merely accelerated existing office trends.

 

While Office Space is Destined to Change, It’s Going Nowhere  

As the world of business shifts and adapts to the new realities of the pandemic, there’s no question that the office will remain the cornerstone of working life. It will act as a place to meet, spark creativity, develop meaningful relationships and foster a culture of trust and teamwork. That said, the days may be numbered for the office setup of the pre-COVID era. Central hubs will be reorganised to better suit the needs of the modern-day employees and companies may leave the city centre to set up flexible campuses in the suburbs.

No matter how the office space industry progresses, we will continue to monitor the situation and report back with any significant updates.

 

 

 

Sources:

https://www.mckinsey.com/business-functions/organization/our-insights/reimagining-the-office-and-work-life-after-covid-19#
https://news.gallup.com/poll/306695/workers-discovering-affinity-remote-work.aspx
https://www.ft.com/content/315095c0-7da0-11ea-8fdb-7ec06edeef84
https://www.employment-studies.co.uk/resource/ies-working-home-wellbeing-survey
https://images.forbes.com/forbesinsights/StudyPDFs/Business_Meetings_FaceToFace.pdf
https://cdn2.hubspot.net/hubfs/4270138/Affinity_March2018%20V2/pdf/harvard-business-review.pdf
https://www.aesc.org/insights/magazine/article/workplaces-disrupted-office-future
https://fortune.com/2020/06/24/offices-coronavirus-regus-spaces-iwg-ceo-covid-19/