Flexible Workspaces in London
A Question and Answer session with Cushman & Wakefield Partner, Amy Taylor, and property content expert Simon Cairnes, from Digital Munkey, about how the pandemic has altered our relationships with our offices and how Cushman Wakefield can help meet those changing needs as we slowly return to work.
Simon: 2020 was a tumultuous year, but If you had to sum up what effect covid has had on the office sector, what would it be?
Amy: It’s brought about an unprecedented focus on flexibility. The uncertainty the crisis has generated means flexibility is now at the heart of everyone’s thinking when it comes to assessing their workplace options. Occupiers are approaching their real estate differently, with a focus on workplace efficiencies and new ways of working – combining collaboration with convenience.
Simon: But weren’t there concerns around the model of co-working and communal environments at the start of the pandemic? What role can flexible workspace play when it comes to businesses assessing their workplace options?
Amy: Yes. Initially, people were worried about the potential for virus transmission in environments where different groups of people were regularly mixing. In addition, short-term contracts made flexible offices obvious targets for reducing overheads for occupiers. As time went by, though, people began to realise that flexible workspaces might actually be the solution to their problems. It meant occupiers could rapidly expand or contract or even move to suit their needs, which were often changing by the day.
Simon: How are operators managing to overcome people’s concerns over social distancing?
Amy: Workplace operators have made changes to layouts to ensure optimum distancing and have substantially increased and tightened cleaning and hygiene procedures. Pre-covid, operators typically allowed around 50sqft per desk. That has now increased to 75sqft. At the same time, many occupiers are now considering using their office space in rotation when returning to work – half-in, half-out – which radically reduces daily density levels. We have seen occupiers looking at taking a whole floor or self-contained spaces to enable them to create a dedicated team space whilst retaining flexibility relating to term. We have also seen occupiers taking office spaces to create collaboration hubs, enabling employees to freely work from home, but also still have a place to work and collaborate with colleagues.
Simon: So, what does the pandemic mean for traditional leased offices?
Amy: Since March, many occupiers have been trying to negotiate rents downwards. If leases are coming to an end, instead of committing to new ones, occupiers are requesting temporary extensions or seeking alternative solutions, such as flexible workplaces. Some of the leased offices that are falling vacant are now being converted into flexible office space by both landlords and operators. Our team have been able to find solutions for occupiers and provide advice to landlords from both from a flex and traditional standpoint during this time. Also, due to increased stock, now is a particularly good time for occupiers to assess their options in the market.
Simon: Will these changes in behaviour last beyond Covid-19?
Amy: Yes, some almost certainly will. At the outset, many people were claiming the office was dead. In reality, the crisis has proved to be a driver of change. In fact, you might even claim it has been the re-inventor of the office. Our work/life balance has been a topic of debate for some time. Covid has forced us to focus on the issue like never before. Although many of us are enjoying certain aspects of working from home, we’ve discovered it’s far from perfect. Not everyone’s home set-ups are suitable – ‘Zoom fatigue’ has set in and people are missing the stimulation provided by interaction with work colleagues. A flexible office offers the perfect balance. Not just today, moving forwards, too. We’ve also recently seen a dramatic rise in popularity of the hub and spoke office. Many occupiers are now electing to have a smaller, centrally located head office (the hub), surrounded by a number of localised ones (the spokes) that are closer to the staff’s homes. This has resulted in reduced costs and commute times and a happier, less stressed, more motivated workforce.
Simon: That sounds great, but doesn’t it work out more expensive than a traditional leased office?
Amy: Not necessarily, no. On the face of it, monthly ‘rental’ payments may appear higher but will often include a lot of extras such as rates, electricity, cleaning and maintenance, broadband, etc. And don’t forget, there won’t normally be any need to pay for dilapidations, nor will there be any requirement to employ someone to manage the office. Even better, as I mentioned earlier, it offers the ability to size up or down, or even re-locate almost instantly, which can sometimes save a great deal of money. On top of that, when an occupier moves in, there will be no upfront capital expenditure – everything is already in place and that means there will be no need for a project manager to facilitate it, either. Flexible office space is therefore a happy medium for many of our clients. And, as we come out of lockdown and return to work, it will help businesses refresh and rebuild their creative hearts and provide a much needed boost to morale, at the same time as offering the kind of flexibility we have all now come to expect.
Simon: Okay, but isn’t flexible workspace only suitable for smaller companies and individuals?
Amy: That’s another thing that’s changing. Before, corporates did sometimes use flexible workspace, but only as a temporary fall-back solution when there was some kind of problem. Now they are considering it alongside more traditional options. Last year, the average desk requirement was 35. Now it’s 50-60 desks and corporate occupiers requiring 500 to 1,000 desks are becoming increasingly common.
Simon: Many thanks. It seems flexible workspaces may well be a ray of light in some difficult times.
Amy: Indeed, and you’re welcome.