Twenty years ago, some predicted the death of the office because they thought improved technology would enable everyone to work from home. Yet today, booming tech companies are increasingly locating offices in vibrant central locations in major cities, with the health and well-being of their employees a key focus of their property strategy. Working from home does not seem to work as a permanent solution, even for the most tech-oriented companies.
- Office property continues to hold value despite more working from home
- The future of the office will depend on getting the workspace right in terms of location and atmosphere
There is a lot of media speculation about the office of the future, covering themes that are quickly becoming reality. Offices may offer greater flexibility, more breakout space and a higher number of showers because of increasing bike usage.
They may even offer other, more fanciful ideas, such as yoga studios and private chefs, too. These days, office occupiers no longer care about desks. They want huddle hubs, mindfulness space, rock rooms and baristas. Where’s it all going to end, though? And how do you build the office of the future?
We think the office of the future will incorporate these features:
1. Central, accessible location
With greater urbanization occurring throughout developed countries and an increasing trend for both living and working in major cities, the importance of a central location that is easily accessible by public transport will become more and more important.
The high level of amenity offered by these locations – such as proximity to restaurants, bars, gyms and shops – is also highly valued. Google, Amazon, Facebook and Apple, for example, have all recently committed to major office developments in central London. Car use and ownership among young people will continue to decline. Out-of-town office parks are much less likely to be developed.
2. Flexibility on space
Lease lengths will continue to shorten, and tenants are increasingly exercising breaks in leases. The rapid growth of co-working reflects this desire for flexibility among office occupiers. The office of the future has to be fit for purpose and flexible – i.e. easily sub-divisible to enable multi-letting, if needed.
Greater breakout space and a higher proportion of meeting rooms will be needed as the way we work will continue to change to become less desk-based. Hot-desking, home-working, flat-screen technology and electronic archiving all mean that less desk space per worker will be needed compared with what has historically been the case. We are particularly cautious about inflexible, purpose-built offices, especially those located out of town.
3. More focus on health and well-being
This will involve not only the inclusion of gyms, bicycle parking and coffee shops but also improving the technical qualities of the buildings. The latter will include better air-quality control, enhanced natural lighting, improved temperature control, greater access to green views, and a reduction in unwanted noise. At the same time, offices will employ building design strategies that encourage physical activity, while likely discouraging sedentariness and bad eating habits.
Businesses still want offices, but it’s about getting the workspace and location right.
Businesses still want offices, but it’s about getting the workspace and location right. Home-working will continue to be more common. “Agile-working” is the new buzzword. But a word of caution: the downside of flexible space is a decrease in secure, long-term income streams. A shift in investors’ mindsets may be required towards a mixed allocation strategy, with a combination of traditional leased offices alongside flexible space and other uses. This will create a cohesive urban environment with a range of appeal.
The office of the future should be central, accessible, flexible, and designed to ensure the health and well-being of its occupiers. Developers and landlords who provide collaborative, hi-tech office space with the right mix of services in a central location will secure high-quality occupiers and rents. They will also deliver strong performance for investors. The office, it seems, has a bright future ahead.
Property investments may carry additional risk of loss due to the nature and volatility of the underlying investments and may not be available for investment by investors unless the investor meets certain regulatory requirements. In considering the prior performance information contained herein, potential investors should bear in mind that past performance is not necessarily indicative of future results, and there can be no assurance that such investments will achieve comparable results.
Companies mentioned for illustrative purposes only and should not be taken as a recommendation to buy or sell any security. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities in this list.
Foreign securities are more volatile, harder to price and less liquid than U.S. securities. They are subject to different accounting and regulatory standards, and political and economic risks. These risks may be enhanced in emerging markets countries.
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