I was recently speaking to Nick Swain, from Kinegistics, who shared with me his thoughts on how working from home is going to be the norm. This was a follow-up to an IACCM Vibe Summit webinar I did with Tim Cummins on the subject of what life will be like in this new economy. Nick noted the following:
The impact of more people working from home will mean both a reduced requirement for office space and change in the type and potentially location of the office space required. In many companies, this is just an acceleration and continuation of a trend that has been in place for some years. Many organisations, before the pandemic, had already introduced hot desking, increased the density of desks, relocated to less expensive locations, put in place the technology to enable home and remote working and had large numbers of people who worked a mixture of home and office based activities. This is largely why the move to home working during the pandemic has been relatively easy in many cases. What the pandemic has done has not only accelerated this trend but shown it can go much further than previously thought feasible.
The implications of this for office property are:
- There will be surplus office accommodation on the market and therefore office rents will come down, particularly in city centres.
- Office accommodation will need to be more focused on collaborative space (eg: meeting rooms, project rooms etc) and less on rows of desks, as people working alone at their own desks can do that remotely.
- More office space could be located outside city centres as most staff will not be commuting to them on a daily basis.
While the pandemic creates uncertainty for many organisations, there is an opportunity for others to commit now to a new way of working and restructure their property portfolio for the longer term. The challenge will be doing than in the current office property market. But taking on a long lease for office property could be good move if it was the right price as part of a strategy that already assumes a high degree of home working.
Nick’s insights ring true from my perspective as well. Take a look around – property markets in New York are dropping, while housing markets in New Jersey are going through the roof. Housing inventory is running dry, as more people are recognizing that the COVID crisis will likely lead to much more time spent working from home. This is not only going to change housing markets, but also shift tax structures, education, and many other things. Get ready and hang on…