Most tenants are making plans; some are making commitments
11 months ago, conversations taking place in virtual board rooms focused on whether the office was needed at all in future. Fast forward to today and the same zoom calls are based more upon the excitement of returning to the office, when we can. It’s fair to say that most of us are craving community, social interactions, and an ability to separate our work life from our home life. But what we’ve learned from the last year is that we like a little of everything in moderation. Put simply, people want balance. And that means businesses too are coming into 2021 with different needs.
With more focus than ever on hybrid working and employee wellness, companies have an opportunity to simultaneously give employees more flexibility than ever and review their investment in real estate.
We recently supported a modern merchant bank in defining their real estate needs. They used to occupy three central London workspaces and now only occupy two. They aren’t downsizing, or taking on a massive amount of floor space. They are simply redefining how they work to provide the best experience for their employees, customers and clients. Ahead of the game, the project kicked off before the pandemic hit, but we’ve continued to support the clients plans throughout the crisis, and their situation is a precedent we’re now seeing echoed by other large businesses.
Different states of play
The response to the mass exodus from the office and the tentative return to work depends largely on the size of the company.
Our sales team are actively engaging with thousands of businesses and finding that larger companies are actively planning; investing in workplace consultancy now ahead of an office move later in 2021 or early 2022. Few businesses will commit to a new lease until they truly understand how hybrid working will change their real estate needs so spatial and cultural analysis is high on the agenda.
Home-working, at least some of the time, is here to stay, but despite that, a number of firms have shown confidence in the London office post-pandemic. Last month law firm Latham & Watkins agreed a major pre-let, expecting to occupy a minimum of 200,000 square feet in the city from early 2026.
At the opposite end of the scale, small businesses have different priorities. With a team of perhaps 40 people, working from home is no great challenge. These companies are making plans for 2-4 months’ time but are in no great hurry. They’re looking for flexible, pre-fitted space, and they’re choosing between serviced offices, or pre-fitted landlord space.
Cushman & Wakefield predict significant growth in managed workspace. Landlords can directly compete with co-working providers by offering a fitted space and employing a managed solution provider to look after it. The benefit to a tenant of having their own front door is no longer just about establishing their brand but also about having more control of covid-security and staff safety.
Landlords already engaging with Thirdway Pulse, who design and deliver futureproofed fit-out, source furniture, install tech and then manage the tenants’ services and utilities, are benefitting from the end-to-end service and zero middle margins as a result.
A new letting experience
For landlords with multiple vacant floors in one building, a single Cat A+ suite remains a sensible investment and a way of showcasing potential. TX (Tenant Experience) takes this opportunity to new levels by introducing design and technology to the first viewing of a fitted floor so that prospective tenants don’t just engage with the built environment, but also design their own office, on another floor, while they’re there. Depending on the tenant they could take a single floor or multiple and know exactly what they’re getting before they leave the first viewing.
This foresight and security of expectations so early in the letting process means landlords can identify interest more quickly, delay further investment until a tenant is secured, and mitigate the risk (and cost) of changing a ready-built environment because it will have been built to the tenant’s requirements. The tenant meanwhile knows up front what their office will look like, how much it will cost and when they can move in.
The office isn’t dead, it’s just different
The way buildings are occupied in future may change, and real estate decisions may take longer, but for the most part, having a base in London is still vital. A central headquarters acts as the glue that keeps a company, people, and culture firmly together and with companies confirming their belief in the office by signing deals, we start to see the first signs of recovery for the industry.