COVID-19 and Changes in Office Space Location, Design & Use

COVID-19 and Changes in Office Space Location, Design & Use
15/07/2020 , by , in EXPERT ZONE

CBRE’s survey reveals a blend of cautious optimism with pragmatic concerns. Executives recognize that reopening workplaces during an active pandemic is an uncertain endeavour.

 

Since lockdown measures were broadly instituted worldwide in March, companies face an unprecedented crisis. After rapidly mobilizing and closing their offices, global corporate real estate executives, in close coordination with company leadership, have risen to the challenge of cautiously beginning the reopening process with strict health and safety protocols.

The workplace is quickly changing: Most respondents indicated workplace transformation is still trending away from dedicated private space and toward shared collaborative space. This is critical for workplace efficiency and satisfying a more hybrid workforce (in-office and remote working) but there is some uncertainty given the health and safety impacts of COVID-19.

More flexible work is expected: 70% of respondents indicated that some portion of their workforce will be allowed to work remotely full-time; 61% of respondents indicated that all employees would be allowed to work outside the office at least part-time.

The physical office will remain important: 41% said the importance of the physical office will decrease only slightly and 38% said it will remain as important, if not more.

Cyclical portfolio adjustments are under pursuit: More than 60% of respondents are pursuing lease renewals and more than half have relocation plans on hold. More than 85% are optimizing their portfolios and more than 75% have expansion plans on hold or canceled.

Long-term strategies are under consideration: 70% are confident in setting long-term real estate strategies even amid the pandemic; less than one in 10 companies are considering leaving high-density urban cores; one-quarter are exploring suburban satellite strategies. 73% of respondents expect flexible office space will play some role in future strategy.

 

Leadership in a Crisis

Beyond immediate tactical concerns of their COVID-19 response, corporate real estate executives are facing strategic obstacles unlike any seen since the Global Financial Crisis. Companywide support is critical for real estate executives to navigate an uncharted market shaped by both the surprising resilience of office-based employees suddenly forced to work from home and by a global economic downturn.

Portfolio Strategy

Occupiers face major strategic decisions about remote working, urban vs. suburban locations and how flexible office space should factor into their plans. These challenges will require an ability to step back from the near-term pressures of reopening workplaces to focus on what’s critical in the long term. Cost savings will be top of mind if recessionary conditions persist, with some occupiers reporting that they are aggressively pursuing consolidation, contraction and exiting as real estate portfolio strategies. As confidence improves, companies will consider whether to pursue any relocation and expansion plans that are currently on hold.

 

Workplace Strategy

The future role of the office is the biggest question facing corporate real estate executives today. Even prior to the pandemic, remote working was a well-established trend as employees became less dependent on the physical office to successfully perform their jobs. In the future when working in the office, employees will have more choice in the spaces they use to accomplish their work, provided they can do so safely. And they’ll have more technology and services to integrate their physical and digital worlds, accelerating many of the design trends that were occurring before COVID-19.

The pandemic has created unprecedented opportunities and challenges for commercial real estate occupiers that likely will usher in a new era of innovation and creative problem-solving. The industry will develop new tools and technologies to make the office a greater source of efficiencies and the hub for collaboration and innovation.

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