Organisations weigh up options to make workplace fit for the future

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a fit for the future workplaceAvison Young, realestateworks and HLM Architects have launched a new report that assesses the impact of this year’s pandemic on workplace and corporate real estate strategies in the longer-term. Over 100 private and public sector companies were asked about their evolving approach to working culture, office design and portfolio strategies in the context of multiple forces of change, including greater resilience, the decarbonisation agenda, personalisation, remote working and the integration of the physical and virtual workspaces.

The survey’s results show how leading organisations are redesigning their workplace and portfolio strategies to be ‘fit for future’, in some cases accelerating existing trends. Corporate real estate directors shared the impact that these trends are having on their strategies, including on workplace design, location, portfolio scale and flexibility, and financial strategy. Their shared insight suggests that the opportunity to cut space has been exaggerated in some quarters and that the move of office space out of city centres is likely to be a more drawn-out process.

 

Workplace design – Making the workplace work

It is likely that the role of the workplace will be increasingly reviewed, extending beyond simply a place to ‘do work’. For many, offices will evolve as a place of collaboration, mentorship and belonging. 78 percent of respondents expect the workplace to be adapted to perform additional social functions.

While most organisations are confident that their portfolios are currently fit for purpose to fulfil medium term business requirements, 55 percent expect their workplace to be re-designed and better managed to improve productivity as a consequence of the pandemic. The enforced working-from-home experiment has further highlighted the need to provide a variety of controllable and adjustable environments to cater to a range of different personalities and tasks, to ensure the office facilitates employee wellbeing, productivity and job satisfaction.

 

Location – Right place, right time

The geographic distribution of a typical occupier’s portfolio is anticipated to change in response to evolving workforce preferences, cost pressures, business resilience and a stronger focus on well-being. 20 percent of survey respondents anticipate that they will disperse their portfolios to be closer to where their workforce lives and wants to work.

While the majority of organisations are yet to conclude a locational review, a quarter of UK respondents were confident that their city centre footprint would not change. It is likely that ‘central hubs’ with ‘spokes’ and rural satellites will gather pace in the near future.

There is also pressure on businesses to strengthen the resilience of their supply chains, which brings an international perspective to locational change. A number of global companies reported that some production and distribution centres are likely to be re-shored to increase supply chain resilience.

 

Portfolio scale and flexibility – More with less

Over half of respondents expect to see a reduction in the scale of their estate, with the majority attributing their intention to downsize their office and retail space to a change in their operating model.

Portfolios need to be right sized to align with new business needs, but permanent remote working will not suit all job requirements or personality types. To balance the increased desire to support a wider range of work styles with ongoing spatial requirements, organisations are looking for flexibility. 85 percent of survey respondents expect their estate to become even more flexible than before, and 50 percent expect an increasing proportion of their estate to be held on shorter terms or flexible leases.

 

Financial strategy – Bottom line

In the short term, the economic impact of Covid-19 and the recessionary environment is likely to drive the most significant changes. However, 69 percent of respondents expect increased active management of property related costs to continue post-pandemic and approaching half expect their cost base to reduce in support of a new operating model. Over a third of respondents are expecting to release value in their freehold or long leasehold buildings, although this is not an option available to all.

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