- 1 Dec 2020
1. Like all real asset classes, the Office is also seeing significant short term impacts from the COVID-19 Pandemic and the forced proliferation of Work From Home.
2. There are some benefits in the WFH paradigm but there are many issues as well as companies and employees are increasingly coming to realize.
3. The office market is staging a strong recovery in terms of leasing and transactions around the world.
4. The Office continues to hold many advantages as a primary place of work due to its ability to boost productivity, innovation, collaboration and socialization as well as to mitigate many of the issues related to remote work, such as burn out and other psychological issues.
5. The Office will have to adapt to cater to new, often hybrid models of work, to promote the wellness of its occupants and to provide them with a high-quality experience. This creates greater relevance to the Co-Working paradigm and to standards such as WELL.
New York City has been ravaged, thousands have perished, workers dread going back to their skyscraper offices and there’s an exodus from the world’s financial centroid. Pundits predict the imminent demise of the Big Apple and its gleaming office buildings.
Londoners shelter in place, thousands have perished and many more suffer. The crisis, of foreign origin, lasts years and it’s widely speculated that The City’s time at the top may have finally come to an end.
Mumbai reels from disease, tens of thousands are afflicted and thousands die. The city’s wealthier citizens consider abandoning their workplaces and homes in the congested metropolis and beating a retreat to the suburbs.
All this sounds all too familiar as we continue to try and make sense of the ongoing pandemic, bombarded by pronouncements by all and sundry that cities and their offices are as extinct as the dinosaur (no, not you, birds!) and that all of us will be working, nay labouring, from the apparent comfort of our homes. But, the dire circumstances described above have nothing to do with COVID-19. In fact, I am referring to the aftermath of the 9/11 terrorist attacks, the London Blitz during World War 2 and the 1896 Mumbai Plague. After the iconic WTC towers became the focal point of the terrible events on that fateful day in September twenty years ago, many experts predicted the end of the skyscraper, that icon of the downtown office.
History shows that all these dire predictions came to nought. The afore-mentioned cities quickly bounced back and continued their ascent as hubs of the global economy, and record numbers of skyscrapers have been built since 2001, including a plethora of tall buildings in New York City itself (more than half of all such buildings were built post 9/11). As news of the demise of the city has been greatly exaggerated many a time, so has the passing of the office. Don’t rely just on me, but it might bear listening to the man who runs one of the world’s largest portfolio of real estate and alternative assets. He wants to not just stay invested in offices and cities but also double down when the right opportunities present themselves.
The fate of the City and the Office have become closely intertwined, one being the reason for the existence of the other. Modern cities flourish on the concentration of economic activity and population created by dense office districts, while downtown offices have come to depend on the ability of cities to agglomerate large talent pools as well as the urban and social infrastructure that enable these, often youthful, workforces to thrive.
Knee Jerk Reactions and the Right Lip Service
That said, what has transpired in the last six months has been unique in its pervasiveness and depth. Never before have office workers, and indeed workers of all types, been driven from their workplaces across the entire world at the same time, and nor has it lasted so long in so many places. What’s more, the often unscientific and sensationalist drumbeat of the media has created an existential fear in many employees about commuting on mass transit systems and congregating in offices.
A large number of office occupiers, across sectors and ranging from startup minnows to technology and banking behemoths have loudly pronounced their intentions to let their employees keep working from home, many till well into 2021 and some apparently forever. Naturally, this has whipped up a frenzy in the media and on social media, fuelled in equal parts by the ever-present human curiosity for anything new and upstart, and the lure of a permanent “work-cation” among many white-collar employees whose roles are well suited for remote work and seemingly less likely to be rationalized than others. Months into the pandemic, surveys of employees and employers seem to be showing that the majority of employees feel at least as or more productive when working from home than at office and while a majority also want to go back to their offices at least some of the time, a lot of people want some work from home time to become a permanent part of the mix.
Source: CBRE Workforce Sentiment Survey, August 2020
Now, one might wonder how much of this productivity plateau or spike, as the case may be, is because very few people would want to admit to being less efficient and effective at a time of global economic turmoil, with greater unemployment than at any time since the Great Depression. Likewise, unless the measurement of productivity fully captures the impact of the erosion of work-life separation and the greater hours that people may be putting in at home, longer but more fragmented work hours may be accounting for some of the purported positive effects. Clearly, there are likely many roles – especially those that are more process-oriented and which need less innovation or collaboration – where there might actually be comparable, if not enhanced, productivity. Likewise, the saving of time spent in the daily commute, especially in the world’s worst congested metropolises (think New York City, Bangalore or any number of others) is very real.
Not surprisingly, employees with long commute times are more likely to consider working from an option closer to or at their homes.
Source: CBRE Workforce Sentiment Survey, August 2020
There has been much talk and some evidence of an exodus of workers from urban centers such as New York City and San Francisco, although the jury is still out on the scale and impact of any actual exodus. Bloomberg recently carried a detailed break up of what has been transpiring with the Big Apple, the upshot being that talk of city slickers beating a hasty retreat to the suburbs and the Sun Belt may be exaggerated and incomplete, like much of what is being discussed about the impact of COVID-19. In the Bay Area, up to 15% of technology workers have either moved out of or plan to move out, at least temporarily, and apartment rents seem to have corrected by up to 15% and listings of homes for sale have soared. On the flip side, in both of these markets, a significant proportion of people have been moving to cities and suburbs in the region, rather than heading to a completely different part of the country. This indicates that they are probably hedging their bets that their employers may ask them to come back to work at some point in the foreseeable future and that the very reasons that they congregated in expensive hubs like New York, Boston, the Bay Area and London – the diversity and depth of the job pool – will continue to hold true even after the pandemic is in the rearview mirror. Furthermore, employees who were looking forward to earning Bay Area pack packages while working from much less expensive locations are realizing that their employers will want to peg salaries to zip codes. In the end, there is no free lunch, even when working from home!
Clearly, there have been a lot of conversations about how remote work will come to dominate the office sector but what is the market telling us about how employers are approaching the situation as evidenced by transactional activity. Have leases been terminated en masse and vacancies shot up in key office markets around the world? It has now been six months or more since the start of this tumultuous period for the nature of work itself, surely the trend must now be clear?
The Evidence for the Resilience of the Office
After a hiatus in the initial weeks and months of the global response to the virus, we have started to see transaction activity resume, particularly since June. While transaction volumes are down on a Year on Year basis, it actually doesn’t look like it is the end of the world for Office real estate. Let’s look at two key markets – the US and India – to see what has been transpiring in terms of real deals at the same time as all the talk about WFH.
New York City, at the same time the largest office market in the world and the epicentre (at least in the beginning) of the pandemic in the US, has seen a definite uptick in leasing over the last few months, headlined by Facebook’s blockbuster 730,000 square foot deal in Manhattan’s Upper West Side. The social media giant, which has been talking loudly about having up to half of its staff on permanent WFH, already has about 1.5 million square feet leased in the same neighbourhood that is dominated by Hudson Yards, the largest mixed-use development in the US. Others like Amazon and Google have stuck with their own ambitious plans that have made NYC the tech hub of the East Coast in recent years. They have also been steadfast in maintaining and expanding their footprints in other key markets such as Boston, Atlanta and Austin.
Even as India struggles to navigate out of its first, massive, wave of infections, the country’s office market – one of the largest and fastest-growing in the world – has awakened from the enforced paralysis of Q2 2020 and has started seeing significant transaction activity. No less than 11 Million square feet of new office space were leased over the last three months, featuring the likes of Amazon, Google, Accenture, Morgan Stanley, JP Morgan and Standard Chartered while over 3.5 million square feet of leases have been renewed by large occupiers like IBM, Cap Gemini, TCS and Microsoft. Overall, leasing activity has reached more than 17 million square feet and this is expected to go up significantly by the end of the year, albeit ending at a much lower total than 2019. On the capital market side, Blackstone has listed a second office REIT in India in August (it was oversubscribed 13 times) while Brookfield is planning to list its own office portfolio before the end of the year. A fourth REIT is also on the anvil.
Source: Raja Seetharaman @ Propstack
Well, that doesn’t seem a lot like the end of the office, does it? To be sure, there have also been instances of firms forgoing lease renewals, releasing existing leases, and putting new leases on hold. For example, retailer REI has decided to let go of its newly completed HQ campus in Seattle. Facebook promptly snapped it up, so it may not quite hold up as a verdict against the idea of the office, but more as a retailer being prudent at time when retailers are under extreme stress worldwide. One may also contend that the impact of the shift to WFH will take many months and years to show. Quite possibly so, but then again it is also hard to blithely write off the fact that very sophisticated occupiers (some of them vocal advocates of WFH) are still making decisions to lease that add up to very significant investments on their part.
After weeks and months of publicly extolling the virtues of WFH, at a time when even opining that employees need to brave the pesky SARS-CoV2 virus would have been considered PR suicide, many CEOs have started to be more public about the shortcomings of WFH in recent weeks. These include the likes of Reed Hastings, Satya Nadella, Tim Cook, Jamie Dimon and Arne Sorensen.
“In all candor, it’s not like being together physically. And so I can’t wait for everybody to be able to come back into the office. I don’t believe that we’ll return to the way we were because we’ve found that there are some things that actually work really well virtually. Tim Cook, CEO of Apple Inc”
“Even in the Seattle region, where we have now sent a lot of people home, we’re realizing that some people would rather have workspace at work once the Covid-19 crisis goes away because they want dedicated workspace with good network connectivity. Satya Nadella, CEO on Microsoft Corp”
“I don’t know the future better than anyone else. I think going back to work is a good thing. I think there are negatives to working from home…We’ve seen productivity drop in certain jobs and alienation go up in certain things. So we want to get back to work in a safe way.” Jamie Dimon, CEO of J.P. Morgan & Chase Co.
You get the point, not everyone is a fan of going all-in on WFH. These are the influential leaders of some of the largest, most powerful employers on the planet and they can clearly see how the enforced absences as a consequence of the pandemic are impacting productivity and the overall performance of the organization. At the very least, not everyone is thinking of giving up all their offices and camping out in the living room forever.
The broad majority of employers are also in favour of returning their workforce to the office with the option of working from home for a fraction of the time.
Source: Brookfield – The Future of the Office, August 2020
Before we put this down to a tyranny of the management, it has also become clear that the majority of employees also don’t want to be cooped up at home, bringing work home on a permanent basis.
Source: Brookfield – The Future of the Office, August 2020/Gensler WFH Survey, 2020
% of employees in major Indian technology hubs who miss the office; Source: Knight Frank Work From Home study, Q2 2020
So why is the Office less universally hated than we would imagine given the commutes, the ever-shrinking personal workspaces and, yes, apparently the public health hazards of being in an enclosed space with a lot of other people? The answer is complicated but impactful to understand because it cuts to the very basis of us being a social species.
The Office is Still Essential
The Homo Sapien is a very social species, however unlikely it sometimes seems given how adept we are at in sowing divisions and fostering conflict. As society has switched from agrarian to knowledge-oriented industries, passing through industrial society along the way, the value of collaboration has snowballed. Work centred around the accumulation, assimilation and processing of various kinds of information, be it research and development of various kinds, financial services or consulting, has become the hallmark of developed societies and the tip of the spear for most economies, adding the most value per capita of employment. These are also the very industries that take up the bulk of office space around the world.
Source: JLL, Future of Office Demand, June 2020
The fact that these sorts of firms tend to like bringing their employees together in large, ever more collaborative offices and the phenomenon of the clustering of employers and employers into hub cities around the world, be it New York, Boston, San Francisco, Bangalore, London or Singapore, is primarily because of the what Professors Michael Porter and Paul Krugman posited as the principles of the development of business clusters/the economies of agglomeration. Putting smart people in physically proximate groupings has benefits for themselves and their organizations as it seems to accelerate the development of new ideas and concepts not only by facilitating greater formal collaboration but also through unstructured or even serendipitous interactions. Say, you run into your friend who works at another firm at the Starbucks near your offices and come up with a new idea over a venti-blonde-soy-latte-with-one-pump-of-hazelnut. Likewise, an abundant and diverse talent pool available in close proximity leads to multi-functional teams coming together in unstructured ways as well as in rapid acquisition of talent through informal channels such as word of mouth. Proximity to knowledge anchors, such as that of the East Cambridge life sciences and R&D cluster to MIT and Harvard University or Silicon Valley to Stanford University, is another key aspect of the clustering effects and here again, there are definite advantages to physical presence as opposed to being on the other side of the country or the world.
Beyond collaboration, employees have been missing the social aspects of being at the workplace including all the informal interactions with their colleagues (here’s looking at you, coffee machine and favourite dive after work, sigh!), the ability to mentor and be mentored and to stay in synch with the culture of the company. Offices also provide much more conducive work environments – better technology, workstations and amenities -and also help create a clearer division between work and life at home.
Source: JLL, Future of Office Demand, June 2020
Source: CBRE Workforce Sentiment Survey, August 2020
It has become very evident that well-designed offices not only promote collaboration – both planned and serendipitous, socialization and enhance individual and group productivity, but they also help to prevent and mitigate burnout among employees, that is increasingly showing up in workforces across the world. Microsoft, the tech titan that powers office work for almost everyone (formerly) found in an office – heck, they have patented “Office 365”! – recently released research showing how employee “burnout” has sharply increased in the WFH regime. An average of 31% of workers reported that the pandemic had increased their feelings of burnout, while workdays were seen to significantly increase in duration.
Source: Microsoft Work Trends report
Coming from a firm that has greatly benefited from virtual collaboration and the shifting of work to the cloud (to the tune of many, many Billions in revenue and market capitalization), the research makes for very interesting reading. The lack of separation between work and life while working from home was cited as the top reason for increased levels of burn out, followed by the inability to interact with colleagues. This aligns with the studies quoted above and creates a clear picture of what we took for granted about the office that many of us used to lament going to day in and day out.
Source: Microsoft Work Trends report
It even seems that the much-hated commute, often cited as yet another reason to never go back to the office, is an essential period of separation or transition between home and work, and vice-versa. The disappearance of the commute, long or short, has negatively impacted the separation between work and life, and enhanced burnout and eroded productivity.
“Commutes provide blocks of uninterrupted time for mentally transitioning to and from work, an important aspect of wellbeing and productivity. People will say, ‘I’m happy I don’t have to commute anymore. I’m saving time.’ But without a routine for ramping up for work and then winding down, we’re emotionally exhausted at the end of the day.”
– Shamsi Iqbal, principal researcher, Microsoft Research
Who would have ever thought that!
If you have been imagining yourself slowly, or not-so-slowly, slipping into insanity during those long virtual meetings that most of us find ourselves being inexorably drawn into these days, fear not, you are actually losing it! Researchers at Microsoft’s Human Factors Lab have been observing how the brainwaves of people participating in long virtual meetings undergo significant changes as they spend more and more time in front of the screen trying to make up a workable proxy for face-to-face time.
Source: Microsoft Work Trends report
Lastly, it seems like clusters of offices and the great cities built up around them actually boost the productivity of their workforces. Robin Harding argues in the Financial Times that cities promote productivity by helping workers and companies learn faster and better, bringing a diverse talent pool together and promoting innovation through, among other things, the afore-mentioned serendipitous collaboration. Larger and denser cities performed better. Offices and mixed-use developments, as both microcosms and constituents of cities, embody the same advantages.
Adapting to the Post-COVID World
While it is evident that the office will not go extinct, not even close to it, we have to accept that the winds of change are blowing across the office landscape as tends to happen after any cataclysmic change in an ecosystem. Just like the pandemics and great fires of the past resulted in better sanitation and building standards, the impact of COVID-19 will necessitate changes in the physical nature of offices as well as in the way landlords approach their tenant relationships in order to ensure that tenants and their employees come back with a feeling of confidence in their workspaces and also continue to find value in occupying high-end office buildings around the world.
For example, years of densification at the office – squeezing more and more people into less and less space – are likely to reverse, both because of the need for distancing in the short and medium-term, and because of the office assuming a central role in collaboration, socialization and community building. Density is highest in Asian cities, with Indian cities like Bangalore and Mumbai having some of the smallest allocations, often as low as 75 Square Feet per person in open-plan, large floorplate, office buildings.
Source: Brookfield – The Future of the Office, August 2020
This trend may quite possibly not just negate the effects of the erosion in office demand due to the short and medium-term economic impact of the pandemic but may result in increased demand for space in the newest, best-designed office buildings. Of course, this implies that there will be an uneven distribution of pandemic-related impact on landlords, with some of the largest ones with the best located and highest quality portfolios doing better than others. On the flip side, owners of suburban offices may be benefited as firms look to diversify their footprint as opposed to consolidating all their offices in the largest cities.
1. Promoting Wellness through Technology
The pandemic has brought Health and Wellness to the fore in terms of priorities that tenants and their employees want landlords to address. Measures designed to enhance health and hygiene are not surprisingly high on the wish list for employees to consider returning to their offices.
Source: Gensler Work from Home Survey, August 2020
All sorts of measures designed to disrupt the transmission of SARS-CoV-2 (and other pathogens), ranging from automatic doors to contactless hand sanitizer dispensers and faucets to enhanced air filtration systems with bug-zapping UV-C and ionization filters, have come to the fore. The International Well Building Institute (IWBI) WELL Building standard that had long languished in the shadow of its far more popular peer the LEED sustainability standard has rapidly found favour with landlords and occupiers around the world. WELL encompasses a wide variety of building design features and operation standards that can not only keep the occupants safe from COVID but also enhance all elements of their holistic wellness is a great way of ensuring a well-rounded experience for building occupants.
For example, Taurus had been working on achieving WELL certification for its Yosemite office building and Zentrum shopping and entertainment precinct, under construction in Trivandrum, well before anyone had heard of the virus from Wuhan. This was done to ensure the best possible experience for the office occupants and shoppers but as the impact of COVID became clear, we have decided to up the ante in terms of the measures being included the WELL strategy. At the same time, these same considerations have become critical components of the ongoing discussions with office and retail occupiers.
2. Changing Ways of Working
While 2020 will not spell the end of the office or the city, the events of the last nine months (yes, it has been THAT long since this started for those of us outside of China!) have accelerated many trends in the way we live, work and play. Just as the pandemic has expedited the growth of e-commerce and the switch to high quality, experiential, retail, offices too will see significant changes in how we work, many of these changes already have been underway well before the virus started doing the rounds.
For example, there had already been an ever-increasing focus on the collaborative nature of work, as well as on enhancing innovation. The now-ubiquitous WFH had been present in some measure, although often with grudging acceptance by managers, in many organizations. Most, if not all, medium and large organizations were already used to working with teams distributed in multiple locations, often times on opposite sides of the planet. The accelerating growth of what are called Global In-house Centers (GICs) or Global Capability Centers (GCCs), which are in essence satellite offices of a company performing core activities such as R&D and trading, in India, Ireland and other countries is a clear indication that work is going where the talent is. In this sense, the validation that remote working can be made to work with at least a modicum of effectiveness in many industries also proves that work can be done as well by someone in Bangalore as in Bangor, Maine or in Trivandrum as in Tallahassee, Florida. This may, in turn, accelerate inter-country movements of roles as much or even more than intra-country transfers where employees head out from the big, expensive cities to smaller, less expensive places or even out to the pastoral idyll. JLL, for example, postulates a work ecosystem that encompasses various types of cities, ranging from the gateways to second and third-tier ones, over which a firm’s workforce may be distributed over the medium and long term.
Source: JLL Future of Office Demand report, 2020
The acceleration of the formation of such office ecosystems will help landlords that can offer multiple location options to their tenants, both in the CBDs of gateway cities as well as in their suburbs and in the CBDs of secondary, innovation-driven cities elsewhere in the country or even in other countries. This favours large landlords and possibly favours the largest ones, like Brookfield, Blackstone, Hines and Tishman, whose portfolios are distributed around the globe. There will continue to be consolidation and expansion of office space but it may be that there may be one or two global hubs with a network of satellite offices, instead of multiple large hubs. This trend is also likely to benefit the embattled co-working industry as well as landlords with their own coworking operations such as our own Indian partner Embassy Group, Tishman Speyer, Hines and others. Indeed, Brookfield scooped up one of India’s largest co-working operators in their recent $2 Billion acquisition of a 12.5 million square foot office and retail portfolio. Over the long term, COVID may help accelerate the blurring of the line between pure-play co-working operators such as We Work and Regus, and office landlords.
While most organizations were already dealing with distributed workforces, it is certainly going to be more of a norm in the short terms as well as over the medium and long terms, and both landlords and occupiers will have to sharpen their focus on technology and design elements to support this. This includes ensuring high-speed data connectivity that can support video conferencing, VR/AR-enabled meetings and cloud computing services, as well as in designing workspaces to be open and collaborative. Once again, landlords of newer, well-designed workspaces with large floorplates will benefit the most.
3. Urban, Mixed-Use developments are still the most desirable
There have been apprehensions that the pandemic would upset the increasingly popular paradigm of mixed-use development by upending some of its key components, such as retail, dining, entertainment and…offices. On the other hand, being stuck at home has also brought into sharper focus what most of us miss the most about urban live – the vibrancy of the experience. Mixed-use developments encapsulate the best of the urban environment that has drawn millions of people back to cities in the past twenty years after they fell out of favour in the preceding decades due to a surge in crime and urban blight.
According to leading design firm Gensler, “Mixed-use environments bring the best of residential and commercial architecture together and create shared environments. Unlike single-use development, a mix of uses forms the backbone of diverse self-sustaining districts and connected communities. People have a desire to be connected, and these districts bring goods and services closer to inhabitants, provide better support mechanisms, and even make it easier to contain and communicate health concerns. By designing and developing better hyper-local, integrated mixed-use districts, we create healthier, safer, and more connected communities.” Mixed-use developments make it more attractive and safer for office workers to congregate close to their workspaces and enjoy all the benefits of urban life within walking distance of where they live and work. Developments like Hudson Yards in New York City, the Reston Town Center in Virginia, and Assembly Row near Boston are great examples of successful developments of this nature, and there’re many more in development, such as Cambridge Crossing in Cambridge, Mass and indeed, our own Downtown Trivandrum project. As urban mass transit limps back very slowly to its pre-COVID usage levels across the world, the Live, Work, Play/Shop paradigm should be even stronger than before and could also make sense in suburbian/secondary city contexts as much as in large urban centers, bringing the same quality of urban living to less dense contexts which may be more desired by relocating millennials.
Offices located within mixed-use developments will stand to gain in having the supporting ecosystem of social infrastructure in their immediate vicinity, if not directly connected to them. Occupiers of such workspaces will be able to attract and retain the best talent much easier than in stodgy, stand-alone buildings because their young, aspiring employees will have immediate access to the urban lifestyle and amenities without having to travel far. Neither will they have to revert to the long commutes which many of them have forsaken for the last few months if they happen to live right next door. Indeed, we have been seeing that the prospective occupiers of the office spaces in our Trivandrum project have been as keen to see the development of the rest of the components of the 5.5 million square foot mixed-use, development as much as about the wellness-related features of the workspaces that they are looking to occupy in a couple of years.
4. Working with Communities and Cities
The fate of the office and the city are entwined now more than ever before, with the quality of life provided by the latter having allowed for the greater clustering of the former in the last couple of decades or more, and in turn, allowing for cities to prosper from higher tax income and so on. The increased clustering and its economies of agglomeration have benefitted both, yet even before the pandemic showed up, fault lines had emerged in this symbiotic relationship. The failure of city governments to make policy and infrastructural development decisions to keep pace with the rapid growth of office employment has resulted in dire housing shortages (resulting in skyrocketing rents and home prices), shortfalls in urban infrastructure and services, and lacunae in the quality of public education. Many of these issues will be exacerbated by the budget cuts in cities hard hit by the economic impact of COVID-19. The issues with cities across the world had already prompted the generation of millennials who had flocked to the city for its quality of life to start abandoning it as they started to form families, and start worrying about more living space and schools for the kids. Losing the core of the workforce was already a worry for employers when the Coronavirus showed up and threw an almighty wrench into the whole issue.
If a long festering problem has been worsened by the impact of the pandemic to an extent that nearly a third of New Yorkers want to abandon their city, then it is high time that the cities start to pragmatically and proactively work to keep on to their valuable workforce. Partnering with the real estate developer community will be vital both to mobilize joint resources as well as to develop finely tailored solutions that ensure that office-goers can be brought back and quickly integrated into the community of the urban center in the shortest time and in the most equitable manner possible. This could mean more pragmatic zoning plans, economically focused public policy and taxation schemes, investment in mass transit and other infrastructure as well as a focused effort to quickly improve the quality of public education and health systems. While there has always been a clamour around the supposed conflict between attracting economically attractive uses to the city and the threat of “gentrification” and the loss of diversity, it will be doing the decision-makers well to realize that without economic activity and the resultant tax income to the cities, they will soon slip back into the blight that almost pushed them over the brink in the 1970s and 80s.
Welcome back to the Office!
As we see both resurgent infection numbers in some parts of the world and signs that the pandemic is beginning to run its course in others, it is becoming clear that the office is here to stay while going through a period of definite and sweeping change in terms of its nature. The nature of work itself will undergo a transformation, one that has long been in the making but is now being expedited by the effects of the pandemic. For the short and medium-term at least, and possibly over the long term, there will be a greater degree of flexibility in the timing and location where work is performed. Some benefits of this flexibility have shown up, as have many issues. What has become clear is that WFH is not a home run in any sense, except in very rare circumstances. Neither is there a significant economic argument for keeping people at home in the long term and giving up on the office, with the savings being shown to be around 1% at the most.
At the same time, large occupiers are voting with their new leases in their confidence in the continuing. Likewise, institutional investors are voting with their mega-bucks in favour of office assets around the world, be it the musings of the CEO of the world’s largest office landlord or the $2 Billion that his investment firm just deployed to buy a 12.5 Million square foot portfolio of primarily offices in India. The office will definitely have to adapt in terms of sharpening the focus on providing a healthy, productive workplace, of adapting to new, hybrid ways of working and to compliment it with the amenities and lifestyle that its occupants desire the most. But landlords who invest their time, management focus and resources in making these changes will continue to earn rich dividends from the continuing success of the office.
See you back at the office!
Country Managing Director, Taurus India