The new office landscape in a COVID-19 world – The luxury of laziness is over
1st June 2020
Covid-19 has changed the office market forever, and the fundamentals that underpinned this sector have shifted irreversibly.
But out of the chaos comes innovation. The last recession saw the birth of WeWork in 2010. Forget their current headlines; this was a start-up driven by young, ambitious visionaries. They were game changers – it was the turning point where we all started to look at the office market in a different way.
WeWork’s offices were cooler, better, faster, sharper and more interesting than ever before. Unfashionable locations became fashionable and we couldn’t get enough of it.
It was the birth of ‘can-do’ not ‘take it or leave it’.
Here we are again, ten years on, and facing another type of recession and it will be another new generation that moves the office market to a new place.
Reinvention will be the key. Of course some companies will go out of business but others will thrive. But one fact remains: the office market will be very different.
Clear changes lie ahead and, as a consequence of the WeWork impact, tenants now expect to be treated as customers or consumers, with higher levels of service and quality.
So, here are my predictions for the office market of the post lockdown world:
- Lease structures will change. They’ll probably be shorter, with three years possibly becoming the norm. If they are longer then breaks will also be standard.
- The introduction of Covid-19 clauses may become commonplace, with any further Government enforced lockdowns triggering automatic rent suspension.
- Where there are breaks, penalties will go hand-in-hand. Tenants will be prepared to pay a small price to avoid long, onerous leases
- Because of short leases, rents will go up. Tenants won’t balk at paying little more now against lower rents over longer terms.
- Technology has and will continue to reduce the physical amount of floor space some companies need. Thank you Zoom and Microsoft Teams – we salute you. Whilst others may increase floor area needs to accommodate the new Covid social distancing measures. The middle market may be the one to suffer.
- Some office-based roles will go forever, never to return.
- The physical nature of staffing an office will change. Some team members and functions will continue to be resourced by remote working even when Covid-19 movement restrictions are over. This will save commuting time, stress, costs and increase productivity.
Not much is sure at the moment, but I think I can confidently make this prediction echoing the words of Simon Sinek: “The luxury of laziness is over; the opportunities for the brave and for the new visionaries are magical.”