More than two years on from the first work-from-home order of the Covid-19 pandemic, business leaders are still grappling with changes to working practices that one executive says could lead to a two-lane economy in which swathes of workers never return to the office.
Panellists at EG’s Cities Live event in Manchester discussed how the demands of the post-pandemic workforce were reshaping the office market and real estate decision-making. Despite the best efforts of many businesses to encourage workers away from Zoom screens and back into the office, EG’s speakers acknowledged that, across industries, the challenge is stark.
“Lots of people don’t want to come back – we have to recognise that lots of people have settled for a different way of working,” said Simon Bedford, a partner in the real assets advisory team at Deloitte, who has been involved in shaping the company’s real estate strategy in the city.
“There is now, I think, a settling out of a pattern,” Bedford added. “My overall view would be that we will continue to have an economy where people value being in city centres and town centres and working together. There will be a second part of the economy about virtual and remote working. How we get them to work together is a significant problem.”
Big vs small
The take-up market in the city has improved since a “pretty dire” 2020, said James Evans, Savills’ head of national office agency, and the first months of 2022 have shown “some increased certainty around what workplace strategy may look like”.
“Some of the smaller to mid-sized businesses, that are possibly privately owned and more fleet of foot in terms of making a decision, are in the market,” Evans said. “If you look at the take-up from the first quarter of 2022, it is largely underpinned by smaller businesses that frankly have had enough of indecision. The bigger corporates – listed businesses that arguably require more difficult approval to be sought from London or New York – are finding it increasingly difficult to make decisions because they simply don’t know what their workspace is going to look like in six to 12 months.”
For MEPC development director Dan Hyde, there are three elements setting the best offices apart from the rest as they refill – their environmental credentials, amenity space and smart technology. “There’s been a huge evolution over the last couple of years in office accommodation and the hotelification of office space. Nowadays people are looking for a type of brand within the office accommodation,” Hyde said. “They want to know what they’re going to receive when they come to work.”
A drive to woo workers back has picked up pace for many reasons, said Shoosmiths partner Kirsty Black – including a push from business clients to return to real-life meetings for pitches and the like. “It’s not just us as a firm,” she said. “Clients want to see us as well, going into their offices, seeing them face-to-face rather than on a computer screen.”
She continued: “We’ve come a long way from when we first started in our careers where presenteeism was a big thing – if you’re in the office and working late and seen to be there, it would then push you on in your career. I’d never want to go back to that, but there has got to be some benefit to being in the office: learning from people, having the senior managers encouraging the juniors that there’s a benefit to being there.”
Much of the challenge will lie around balancing encouragement with requirement, panellists agreed, noting their discussion was coming just days after business leader Elon Musk told his own staff that working from home was “phoning it in” and that they should resign if they weren’t willing to come into the office.
“At the moment it’s all good because productivity and returns for businesses are pretty rosy and people are saying ‘this works’,” said MEPC’s Hyde. “The question is, does that work because you have a body of people working from home who used to work in an office and grew up with values and culture and an ethos a business had to generate? Will that, over time as juniors start coming through, not be there and productivity start to drop off? You may see a change from a carrot approach to more of a stick. Business is business at the end of the day.”
A threat worse than Covid
The broader economy, too, is likely to influence companies’ ability to dictate where and when people work, said Evans. “The labour market introduces an additional layer to this question,” he said. “It is exceptionally tight at the moment – anyone who is recruiting in any industry is finding it difficult. Senior leadership are having to accept the fact that people want to work more agilely. If unemployment was raging, it might be a slightly different argument.”
Panellists also asked how much of the return to the office will be driven by questions of culture outside of the remit of real estate – but which the industry should still support.
“I believe the bigger threat to our industry is not Covid, it’s bad company cultures,” said Caleb Parker, founder of the space-as-a-service brand Bold. “Why are people not wanting to come back in? Because of toxicity, because it’s a better environment when they’re working from home and they don’t have to be around negativity or a culture where they have to be next to the boss at 7am.
“As an industry we have to address that. We should be standing up for good company culture and that should be what we encourage to happen in our buildings.”
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