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Workplaces must adapt to survive
M&G Real Estate’s Global Outlook Report highlights the uncertainty in the office market and the need for investors to carefully consider where to deploy capital - ‘There is a future for the office, says M&G’.
In this article, Co-Founder and Director of Backbone Connect, Dave McLeod agrees with M&G’s Richard Gwilliam; the focus should be on the ‘right kinds of offices’ best-placed to weather Covid-19 and beyond.
But identifying the right assets in the right markets isn’t enough. Investors must also look at how to upgrade workplaces to maintain occupancy rates.
In the last recession, London vacancies doubled to 11% but landlords who invested achieved better leasing rates than before the downturn. Building connectivity is often overlooked in workplace fit-outs, but is essential – few businesses today could operate without an effective internet connection. It is one of the most crucial ways to future-proof assets in the face of Covid-19, which has accelerated the ‘WeWork effect’: tenants expect offices to be quick and easy to move into, with essential services in place.
Landlords must address tenants’ challenges head on. Business owners, keen to tackle the loss of team culture and creativity that can come with homeworking, are grappling with how eventually to encourage employees back to the workplace. The office should be a space for creativity, collaboration and team-building – but only if the technical infrastructure to support things like brainstorming, research and group video calls is robust and readily available. Some form of flexible, blended working looks to be here to stay, increasing the importance of good building connectivity. To reduce vacancies, successful offices will make the tenant experience as seamless as possible and support the move to flexible working.
As M&G’s research shows, there is a future for the office. Investors should support tenants to make sure they are a part of it – easing the pain of transitioning to a new way of working and adding value to occupiers’ businesses beyond the physical fabric of the building.