It quickly became clear when the COVID-19 pandemic seized the globe, that the work landscape was going to change irreversibly. The relatively smooth switch for most businesses to remote working, afforded by the digital era in which the pandemic struck, meant that flexible working would be here to stay. Flexible working was no longer the apologetic request of the working parent. Instead, it became a convenience for all.
It was not an outlandish assumption, therefore, that business tenancies would see permanent changes including shrinking office spaces, fewer lease extensions or a reduction in office spaces altogether. Indeed, it was thought that many businesses might forego their offices and move to permanently remote working.
Almost three years on from the start of the pandemic, those assumptions for the commercial property market haven’t quite panned out to that extreme.
Indeed, statistics show that businesses are increasingly looking to switch from long leases to flexible ones (also known as ‘flex space’). An independent survey by flex space operator Orega revealed that, of businesses looking to reduce their office space, more than half are considering a switch from long leases to flex spaces. Flex spaces are commercial multi occupier spaces which focus on offering more flexible space allotment and lease terms.
A flex space letting could be shorter term (up to 12 months) or even up to 10 years – and most flex space providers have different size spaces available so that occupiers can more easily accommodate growth changes or varying staff work patterns. This is particularly helpful in the early post-pandemic years, where businesses are still potentially working out the after-effects of COVID-19 on their sustainability and profitability as well as establishing a future direction.
Some organisations are investing in higher quality office spaces to improve the office experience. Others are adapting spaces within their offices for other purposes to keep encouraging office attendance for collaboration reasons or social or morale boosting purposes.
There are fears of hybrid working, such as the creation of a two-tiered workforce (where staff who work primarily or exclusively from home find themselves ‘out of sight, out of mind’ when it comes to contributing ideas, or being put forward for promotions); a reduction in performance (with less opportunities for ideas to organically flourish); and disadvantages for juniors or trainees who could find themselves with less opportunity to learn from experienced staff (listening to phone calls, being given ad hoc chances to observe client meetings etc).
Such fears might explain why the post pandemic commercial property market has become more flexible, just like the more flexible workforce that use the properties. But, not everything is super flexible. Some organisations are setting minimum office attendance requirements or even compulsory days. These actions might be taken to sustain the viability of the business premises as well as encourage in-person collaboration.
As confirmed by the Landmark Information Group, the commercial market has been more stable than the residential market since the onset of the pandemic. In fact, Landmark are seeing that larger commercial planning applications have surpassed 2019 levels overall in the past seven months. The demand and need is still there. Economic pressures have increased, particularly in recent months with the onset of a recession, but commercial lettings have not reduced as drastically as one might have thought they would back in 2020. What is clear is that commercial property lettings are adapting to accommodate the more flexible landscape of hybrid-working.
Key points
- Businesses are responding to the need for flexible workspaces to accommodate a more flexi-style workforce.
- There is still a need for office spaces. Employees may be eager to embrace a more flexible working style, but not at the expense of office interaction altogether.
- The commercial property market has proven itself as more resilient and capable of change than might have been thought previously