Is this the end of the office?

I read something recently (heavens knows where) claiming that retail property occupancy will not return to pre-recession levels. A statement like this may sound dramatic and surprising, but I think it is a safe prediction and the continuing headlines of failing retailers and the growth of online shopping would seem to bear this out.

Moreover, I also believe the same is true of commercial office space.

The office of the future?

The technology and social factor

Independently of the economic circumstances, we also have social and technological changes that are facilitating a different way of operating: flexible working; cost reduction opportunities; cloud and mobile technology; e-commerce, etc.

There is a lot of discussion around the idea of flexible working and its’ associated benefits. Combine this with the increasing number of start-ups in the recession, many working from home, and the above mentioned changes in the retail landscape, and the net result is that we no longer need so much commercial space.

BT started making changes to their working practices over a decade ago: introducing flexible working options; reorganising internal office environments; and reducing their real estate costs. Combined with other environmental management changes, BT estimates it saved £600m, in a ten-year period.

A number of large organisations are adopting similar practices, including HSBC, Microsoft, Hewlett Packard, Nokia, Orange and O2 to name but a few.

At the other end of the scale, small businesses are well ahead of the curve, working from home, a business centre, a cafe or on the move and using cloud and mobile technology to ensure they can work anywhere.

This does not sound like a future where the office is the default workplace as it was in the industrial age.

 

Is Yahoo right?

On the other hand, this article explains why Yahoo is ending flexible practices and insisting their staff work at the office.

I can easily imagine large companies being wary of flexible working or paying lip service to it but then not delivering. There is always resistance to change.

The central premise to Yahoo’s argument is the importance of face-to –face interaction, which is undoubtedly crucial. We rely on personal contact to share information and ideas, to coordinate effort, and build relationships that enhance performance and productivity.

But it doesn’t have to be one or the other. What is required is that employers work with employees to create the right environment to balance proper office time with colleagues, managers and clients with the flexibility to work around family needs and beneficial logistical outcomes like reducing car journeys and avoiding rush-hour traffic, etc.

 

So what about the office?

The commercial property market as a whole will, of course, recover. Although retail and office space may not be required as much as before, the empty space will be put to other use.

As investors gain more confidence, we can expect much of this space to be converted into hotels and living accommodation and some, hopefully, refurbished to provide state of the art office facilities, whether this be conventional lease, serviced office licenses or new, hybrid arrangements.

In fact, this process has already started, though it will take a while to really gain momentum.

And, despite some organisations’ resistance to change, it seems to me that we will continue to need lees office space and that even businesses that have benefited from the situation, like the serviced office sector, will have to keep adapting to keep up with the ways people want to work.

However, I do not believe that the office is dead. It still has an important role to play in many organisations and while many may get along very well without, for the foreseeable future, many more will not.

The future contains the office, but the office of the future simply does not contain everyone working in the organisation.

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