Seventy-three per cent of UK business leaders predict office downsizing in the coming year, according to an independent survey commissioned by property development firm Accumulate Capital.
The survey which asked the opinion of more than 500 senior decision-makers from businesses all over the UK, also found that 37% are planning to relocate to a smaller commercial space in the next year.
The majority believe working from home will become the new norm, while 45% of businesses do not see a situation where all their employees will be working in the office at the same time.
James Stanton, property director & managing partner at Hoxton Property says: “For the time being, the commercial property landscape has certainly changed its course; more and more companies will begin to utilise smaller premises and encourage their staff from home a few days a week as opposed to full-time. From a company standpoint, smaller workspaces are a great opportunity for cost-cutting as they do not have to fear their workforce will lag in productivity or efficiency.
“Figures illustrate that work-from-home productivity to be of a similar level when staff are in the office. However, companies’ attitudes may eventually change slowly, and they will want their staff back in offices as companies begin to turn profits once again and get back on their feet in 18 to 24 months. The commercial market is due a correction in pricing, and this could present an opportunity for the market to adjust in time for commercial property demand.”
Kirsty Jackson, head of commercial property at Ramsdens Solicitors says the Coronavirus pandemic will inevitably lead to a re-evaluation of the need for office space, particularly in major cities where the costs are high.
“If there is a move away from offices, we will no doubt also see a significant impact on business such as cafes and restaurants in city centres, whose trade largely depends on the office workers that visit them. We know that the retail and hospitality sector has seen a massive decline in trade, and the demand for weaker retail premises is low, with many tenants struggling to pay the rent and looking for ways to exit their lease,” she adds.
From an investing point of view, Jackson believes that investors will need to assess their portfolios to ensure that they have a resilient mix of assets to protect against any long-term effects, but the commercial property market will see a recovery from the impacts of Covid-19 once ‘new norms’ in our lifestyles has been established.
Warwick Swift, commercial manager at property inventory software firm InventoryBase believes that the Coronavirus pandemic will undoubtedly change the way office spaces will be designed in the future, he says: “The pandemic may be the driving force behind office design innovation, leading to commercial spaces that prioritise health and safety and employee wellbeing. Offices are already having to make safety arrangements and businesses will be eager to get people back in the office, encouraging new ways of adapting the space they currently occupy.
“Working from home could become a lasting arrangement for some, but most people will be reluctant to give up the social aspect of the office so the desire for safe spaces will be there as more people return to work.”