Daily Digest News – April 12, 2021

Daily Digest April 12

Hand selected flexible workspace news from the most reliable sources to keep you ahead of the pack. We find all the latest news, so you don’t have to. Morning and afternoon updates. Stay in the know.

Here’s what you need to know today:

Skill Sets Will Transform The Workplace

The 2021 Mercer Global Talent Trends survey has shown that the majority of organizations are focusing on upskilling and reskilling to boost workplace transformation. 

Over the past year, the workforce has completely evolved and become more reliant on technology and the idea of flexibility in where, when and how we work. 

“It became clear during the pandemic that skills fuel business transformation and organizational resilience,” said Kate Bravery, Global Advisory Insights and Solutions Leader at Mercer. “Companies that took inventory of their workforce or talent ecosystem have been able to find talent quickly, move talent to where it’s needed most, and make critical talent decisions to keep the business running during uncertain times.” 

The research revealed that 58% of UK organizations have started identifying new skills that will be necessary for the post-pandemic workplace, while 21% of HR leaders are incorporating various skills-driven strategies. 

Additionally, the survey showed the most important skills that organizations will need to obtain to be successful, including collaborative skills, empathetic management, an adaptive mindset and more. 

“How we work is changing at pace and how organizations were set up a year ago is likely to be out of date now,” said Lisa Lyons, UK Workforce Transformation Leader, Mercer. “A more agile way of working is needed to meet this changing business environment. Savvy leaders who want to stay ahead of competition will value skills as their new currency. 

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Workers Do Not Want To Return To The Office Full-time

The biggest takeaway of the past year is that many professionals can work from virtually anywhere. Whether it’s your home, a coffee shop or a flexible workspace, traveling to your company’s office tower in the city isn’t necessary for all. 

This has led many organizations to cut down on their real estate footprint and accommodate more flexible working arrangements for the future. A survey from Accenture ACN found that 79% of 9,650 respondents across 19 countries do not want to return to the office. 

However, this does not indicate that they wish to work from home forever. Instead, employees want a “third space” that is outside of their home and the office. Even more, over half said they would be willing to pay up to $100 per month to work from a café, hotel or other alternative workspace 

“This is not just about office-based workers,” said Oliver Wright, Global Head of Consumer Goods for Accenture. “Consumer industry leaders are increasingly having conversations about distributed manufacturing models, where individual workers are spread across multiple locations, facilitated by remote monitoring and management.” 

While it is clear that many organizations are looking towards adopting this hybrid model, the outcome of this transition is still uncertain. Still, it is likely that employees working for large tech companies could move outside of the expensive Bay Area and to secondary cities or the suburbs instead. 

Not only can employees have more freedom in where they work from, but employers will also be able to broaden their talent pool by tapping into various geographical regions to find the best potential workers. 

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WeWork Aims To Be EBITDA Profitable By The End Of The Year

After over a year of trying to remedy its tarnished reputation, WeWork will be going public by merging with special purpose acquisition company (SPAC) BowX Acquisition Corporation. 

The coworking company’s first attempt to go public failed, but this time it is being led by real estate veteran and CEO Sandeep Mathrani, who claims that the organization will finally be EBITDA profitable by the fourth quarter of this year.

However, this is not the same as total profitability since EBITDA indicates a company’s earnings before interest, taxes, depreciation and amortization. 

This news follows WeWork’s challenging year due to the pandemic, which led to skyrocketing vacancy rates. In fact, in order to be profitable in the timeline it has set, WeWork would need its occupancy levels to grow from 47% to 75% by the end of the year. 

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While the firm can anticipate this growth by focusing on companies who are rethinking their workplace strategies and showing interest in flexible workspace for their newly adopted hybrid models, deals have not been signed yet. 

“It feels a bit aggressive,” said Barry Oxford, an analyst at D.A. Davidson. “If you were to compare between a best-case scenario, a normal scenario, and the worst-case scenario, it feels like they’re showcasing the best-case scenario.” 

While the company’s projections reflect some of the analysis that has come out about the return to the office, companies are still wrestling with the best post-pandemic workplace solutions. 

For WeWork in particular, they will continue to target larger corporates moving forward, which currently makes up 50% of their business. 

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IWG To Provide Coworking Spaces For Civil Servants

Whitehall has signed a deal with IWG to provide 10 coworking spaces across the UK for civil servants to use when they are not in London.

The civil service contract would allow 430,000 workers to have more of a say in where and when they work.

“If you had asked me a year ago, I would have said exactly what I’m saying now: that office space – not all of it, but a large proportion – will be close to where people live,” said Mark Dixon, CEO of IWG.

Dixon added that hybrid working will become one of the most popular work models moving forward, as it helps businesses balance both the benefits of the office and remote working.

The hubs for civil servants also reflects the UK government’s goal of allowing more professionals to work wherever best suits them.

Credit: IWG

Flex Space Is On The Rise

Last year, the flexible workspace industry saw activity come to a halt. The close-knit community that these spaces once prided themselves in became one of the most high-risk environments during the pandemic.

However, as we enter a post-pandemic society and workers are not eager to return to the office, these flexible spaces could make a huge comeback.

“This is more meaningful than a shifting of deckchairs,” said Ben Munn, managing director of flex space at JLL. “Companies and investors are taking a different view on flex space entirely and are willing to invest because they see this as a bigger proportion of the overall office market than it is currently.”

However, the industry will have to undergo a major transformation in order to accommodate the new demands of workers. For instance, Munn says that desk space will be aggregated and rely on technology in a way that allows users to see when flexible space is available near them.

This also means investors and office owners will only look to make deals with trustworthy and well-financed operators.

At the moment, major operators are making big moves to come back from the major losses they experienced in 2020 through lease renegotiations and even acquisitions of smaller firms.

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Silicon Valley’s Office Market Slowly Reemerges

A new Silicon Valley report from Colliers International has found that the office market may finally begin to recover after experiencing a rocky first quarter of 2021.

While there is a glimmer of hope for the market, it is still uncertain how fast workers will return to the office, especially since Santa Clara County health officials are still encouraging telework arrangements.

During the first quarter of 2021, Silicon Valley’s office vacancy rate was at 9.4%, up from 8.2% during the fourth quarter of 2020.

In the midst of the pandemic, many organizations decided to let go of office space as remote working arrangements remained necessary. This led to a growth in sublease office space, which has grown for the fourth consecutive quarter.

However, while rents in the first quarter remained lower than the fourth quarter of 2020, rates were higher than this time last year.

Monthly office rents averaged $5.15 per square foot during the first quarter of this year, an uptick from the $5.06 per square foot during the first quarter of 2020.

“There is light at the end of the tunnel with vaccinations ramping up and a date of June 15 set to fully reopen California, which could signal a rebound for Silicon Valley’s office market,” said Lena Tutko, San Jose-based senior research manager with Colliers International.

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