With an astounding 88% of businesses having been forced by the pandemic to shift online almost overnight, the future of work now looks very different and apps such as Zoom and Meets have helped to redefine how we work and where we work, while boosting our appetite for change elsewhere much faster than anyone could have previously expected.
So what does this rapid change mean for the real estate sector and our cities today? And how can new tech help to support this undeniable movement?
1. The case for decentralisation
The pressure to adapt has meant many companies are now embracing a more agile approach, optimising through a new hybrid model of working. Greater flexibility has given people a chance to realise not only how important their work/life balance is, while seeking to maintain their productivity, company culture and overall business performance. With this in mind, many businesses have begun to rent smaller offices closer to their employee’s homes, giving them the option to experience both. For example, Standard Chartered has introduced a new “near-home” workspace for staff, allowing employees to walk to work in under 30 minutes.
From an employee’s perspective, such a decentralised model strikes a perfect balance – offering the chance to work from home, whilst also giving an option to work in a different environment. Whereas, from a business perspective, decentralisation saves the cost of renting a single large office space in the city centre, by instead distributing the cost over several workspaces, in less expensive areas. In such a volatile time, prioritising shared, flexible spaces may well benefit in the long run, as it dilutes the element of prediction and uncertainty – better accounting for new opportunities for rapid growth, or perhaps downsizing if the need arises.
2. Tech’s role in efficient decentralisation
As tenants look to balance physical office space with hybrid work models, the flexibility of our workplaces will be a determining factor in our success… and this requires better technology.
Many businesses wouldn’t have survived the past year without apps such as Teams and Trello but, with the future looking more flexible, tech companies need to go one step further. At a brand level, one example of a company that has been continuously responding to our changing demands is Microsoft. They’ve recently upgraded their ‘Teams’ model; combining spatial audio, hidden microphones and intelligent cameras to create a more “unified” experience for remote attendees. These alterations may seem minor – however these small modifications are enabling better tech-led experiences that seamlessly integrate with our new work environments.
Leveraging the right technology can give your tenants and their employees more choice in how and where they work. This kind of interaction will increase their satisfaction with your building, which will allow you to get ahead of changes to leasing agreements, open up additional revenue streams, and strengthen your brand as a landlord. The combination of new initiatives such as Community Apps which connect landlords and tenants through a central hub, paired with better remote technology, will ensure this decentralised model benefits everyone – from landlords and retailers to individual employees and entire businesses.
3. The city-scale impact of this shift
It’s important to take into account the repercussions of this rapid pace of change at a city scale. Moving away from commuting and towards distributed local offices (alongside an increased appetite for online shopping) is having a huge knock-on effect on the high street as we see it today. This is because the office jobs bring in hundreds and thousands of higher paid people with spare cash in their pockets into the city centre every day. One clear example of this is Pret a Manger, suffering a dramatic 60% drop in sales compared to the year before; cutting nearly 2,900 of jobs. Although there are many positives that come with the agglomeration economies, this new workplace transformation is fuelling major concerns for the smaller independent city businesses and the economy as a whole.
4. Wider considerations: a moment of opportunity
Changing demands, paired with vacant retail and office space creates the unique opportunity to re-think the city centre and create a better balance for communities. Empty office space could be replaced with affordable housing projects – helping local governments meet their sustainability commitments and taking the pressure off undeveloped land on the outskirts of towns and cities. In addition, if combined with other measures like the First Homes initiative, we may have found the solution to satisfy the growing proportion of first time buyers looking to live in central locations, without the unachievable price tag.
The chief economist at KPMG UK, Yael Selfin, believes that city centres “will need to be reimagined as cultural and recreational hubs that will act as magnets for businesses and jobs able to transform less prosperous areas”. As an Oxford Street office, we were excited to see Westminster City Council’s bold new vision of the new “Oxford Street District”, and were pleasantly surprised by the greener, smarter and more sustainable use of the space. Schemes like these show great promise for the future of city centres – with new innovations highlighting how decentralisation can lead to bigger things and create positive opportunities for change.
There isn’t one clear way forward, as businesses juggle between fully flexible, distributed or remote models. The only thing we know for certain is that the workspace real estate sector is experiencing its biggest transformation in history.
The success of decentralisation relies on a strong digital layer that encompasses all of its physical and virtual elements cohesively, alongside top-down government action that responds to our changing demands from our city centres. It’ll take careful planning, but if done well, and with people at the forefront of their minds, this change has the potential to create a trickle down effect that can benefit entire communities… and that can only be a good thing.