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Markets & Geopolitics

Tomorrow’s workplace today: Part 1 – Home is where the work is

Tina Paillet is Chair of RICS Europe and a senior executive at one of the world’s largest real estate asset managers. She writes here in a personal capacity. In this five-part series, she will consider what new workplace paradigms mean for investors and occupiers, employers and employees. This week, she looks at whether size matters in the new age of homeworking.

Tina Paillet, Chair, RICS Europe
6 August 2020

The discussion around the merits of remote and office-based working has recently taken on an all or nothing dynamic. One need not look far to find headlines such as “The Death of the Office” or “Will Covid-19 end open-plan offices, useless meetings or handshakes?” This binary vision has been further fuelled by interventions from some of the world’s most high-profile corporate leaders.

Remote working as seen by occupiers

“The past few months have proven we can make [remote working] work,” stated Jack Dorsey, CEO of Twitter as early as mid-May. And he didn’t stop there: “If our employees are in a role and situation that enables them to work from home and they want to continue to do so forever, we will make that happen."

Shortly thereafter, others joined in – notably, Tobi Ludke, CEO of Shopify, who declared: “Office-centricity is over”

Shopify's offices will remain closed until 2021 and the majority of employees will continue working remotely even when they reopen. Square, Spotify, Visa, Mastercard and Google are among other global firms that have indicated their personnel will work from home until at least the end of this year.

If our employees are in a role and situation that enables them to work from home and they want to continue to do so forever, we will make that happen.

Jack Dorsey
CEO, Twitter

Shopify's offices will remain closed until 2021 and the majority of employees will continue working remotely even when they reopen. Square, Spotify, Visa, Mastercard and Google are among other global firms that have indicated their personnel will work from home until at least the end of this year.

With 95% of Facebook’s 40,000 employees successfully remote working during the pandemic, Mark Zuckerberg has talked of a permanent culture shift. He estimates that as much as 50% of his workforce will work remotely over the coming five to ten years. Facebook surveys have found that more than half of employees are at least as productive from home as the office. About 40% are interested in full-time remote work.

Naturally, any such widespread shift in working patterns will have major implications for cities, central business districts and large head-quarter buildings.

The future of cities

It would be wrong to consider the future of the office in isolation. The location of choice for headquarters of major corporations has long been the global cities with their easy access to talent, infrastructure and markets.

Will the post-Covid-19 city suffer from the dislocation of these highly coveted knowledge workers and creative professionals?

The very attributes of global cities which so attract both talent and corporations seem to be turning against them. International trade and the related movement of people and goods facilitates the import of viruses. High population density helps those viruses to spread. And better health infrastructure draws people in, creating more interaction between the rural and urban populations and further aiding transmission.

It is, then, not surprising that major cities around the world have become the epicentres of this emergency, but their resilience should not be underestimated. Cities have found a way to prosper through history’s many crises, attracting an ever-larger share of the global population as they have done so. This will surely continue, driven by new technology and infrastructure, public and private investment, and with the added impetus of local and global community action. We can be hopeful that ways will be found to better combat disease, improve air quality, embed active travel and green infrastructure. In doing so, cities can address both the impending risks of climate change and the  inequalities in global cities that have been laid bare by the pandemic. Much needed changes to public policy could usher in the true “live, work, play” city.

Smart, shared autonomous vehicles will allow for less vehicular traffic on the streets, allowing space previously used for parking to be “greened.” Widespread use of 3D printers and recycled materials can reposition industrial production as a cleaner, less wasteful and less transport intensive endeavor.

We also need to recognize that the way we navigate, interact with and use cities has already changed substantially over the past few years. We now rely largely on technology to direct us along the quickest routes to our destination, using the best available transport options. When we arrive, different technologies advise us on where to stay, where to go, what to do and even who to meet. In this way, technology curates our use of cities. For many during lockdown, technology has been a blessing, providing much needed daily contact with relatives, as well as numerous cultural and social events. We have already seen live theatre, opera, and ballet going online. In some cases, we may come to prefer virtual interaction over resident interaction – especially as technologies and applications become progressively more integrated with the physical being. The growing prevalence of wearable and immersive technologies such as augmented or virtual reality is a trend worth watching closely.

The distributed workforce

The worldwide homeworking experiment necessitated by the lockdown has proved surprisingly successful. One possible outcome of this could be the emergence of “spoke and hub” models of locational working. Offices will be reorganized, redesigned and, most likely, resized. Their overarching purpose will be to enable team working and co-creation.

This will be a “part time” location for many employees, with the other part of their time spent at home, in bespoke satellite offices, or so-called Workspace-as-a-Service locations.

Tier 2 and 3 cities, often more liveable due to lower levels of density, congestion and pollution, could serve as secondary campus locations for remote workers. Many large cities have already seen an exodus of their professional population during the lockdown – a foreshadowing of what may be to come. Many of those city dwellers who have escaped to quieter environs have found the experience a positive one. Residential property agents are reporting an uptick in interest for homes with gardens and outdoor space. The generosity of homework schemes is likely to become an incentive touted by employers in the war for talent. It follows that the capacity of corporate headquarters could shrink to suit.

The generosity of homework schemes is likely to become an incentive touted by employers in the war for talent. It follows that the capacity of corporate headquarters could shrink to suit.

UK workplace studies pre-Covid-19 were already showing that, on average, only 48% of desks were in use in a typical office space[1]. With widespread homeworking supported by data driven collaboration and optimization tools, a 50% reduction in office space would seem achievable for many corporates.

If the distributed workforce is indeed the future, how long will it be before these changes are fully realised? The impact of the current crisis may take some time to play out and outcomes will greatly depend on a number of factors.

First is the depth of the economic downturn. The collateral effects of the lockdown could include a rush to downsize, as enterprises look to cut overhead costs while boosting agility and productivity. The tide has turned on what has, for the past few years, been a landlord’s market, revealing a new and unprecedented form of the enlightened tenant’s market.

Secondly, there is the ability to rescind on-going lease obligations. With three-to-five-year lease lengths standard in most European markets, tenants will likely be seeking to renegotiate or rescind tenancy agreements over the coming years.

The final factor is the future course of the pandemic; the longer it lasts, the less likely firms are to go back to the old ways of working. Permanent, radical tech and design solutions will be necessary to keep employees happy, healthy and productive in the new world of work and workplace.