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Here’s what you need to know today:
- City Of London To Transform Offices Into Residences
- Expectations For The Post-pandemic Office
- Proptech Is Transforming The Office Industry
- Employee Wellbeing Linked To Company Performance
- Could Job Rebound Increase Office Demand?
- How Flexible Work Will Shape Our Cities
City Of London To Transform Offices Into Residences
The City of London Corporation has announced it will use a combination of new schemes and refurbishments of old buildings to create at least 1,500 new homes by 2030.
The Corporation, which watches after the Square Mile, is transforming these spaces in order to accommodate the increase of flexible working. This is due to current government guidance suggesting people continue working from home if possible.
The changes will include at least 35% affordable housing. As of March 2020, there were estimated to be 7,850 residential units in the area.
As part of the new proposals, long-term leases in empty buildings may be offered to creatives, as well as “high-potential tech-led businesses” that could help improve the area.
“Firms have told us that they remain committed to retaining a central London hub but how they operate will inevitably change to reflect post-pandemic trends, such as hybrid and flexible working,” said Catherine McGuinness, policy chair at the City of London Corporation. “The Square Mile must evolve in order to provide an ecosystem that remains attractive to workers, visitors, learners and residents.”
Expectations For The Post-pandemic Office
Predictions about the post-pandemic office have ranged from one extreme to the other.
While some have anticipated that the office will be totally obsolete, others believe it will bounce back to pre-pandemic normalcy eventually. But the reality falls somewhere in the middle.
In fact, the most likely scenario that analysts are coming to terms with is an emphasis of flexibility to work from home or other locations when needed.
As vaccines become widely distributed, the hope of returning to the office is slowly becoming a reality. This will also depend on numerous other factors, such as schools reopening and mass transit becoming more safe.
Although there is a desire to come back to the workplace, this transition will likely occur in the latter part of the year.
Part of this shift back to the office will include the adoption of more flex space that provides workers who want a physical workplace, without committing to long-term leases.
These offices will play a significant role in new strategies for companies, such as the hub-and-spoke model that allows for more remote working and offices outside of city centers. This helps cut down on costs during a time when the economy remains uncertain.
Adopting this trend coincides with the pivot to more hybrid working models that allow employees to split their time between the office, their homes and alternative workspaces.
Proptech Is Transforming The Office Industry
Smart offices have been growing in popularity in recent years. These technologies allow landlords to cut down on costs, control heating and lighting usage, occupancy levels, while also collecting data to help them improve their daily operations.
The property technology industry has skyrocketed in popularity as property managers want deeper insights into how to control their energy usage and prepare for workers to return to the office space.
“There will be a dramatic increase in the information we have about how people use our buildings, and sensors will be more common,” said Charlie Kuntz, innovation officer at real estate investment firm Hines.
However, this type of data collection has led to concerns of cybersecurity. In fact, a Deloitte report revealed that cybersecurity threats have become much more sophisticated in recent months. Now, the risk of smart devices being hacked has become a huge concern.
Despite these worries, developers are anticipating big changes to the post-pandemic commercial real estate world. With companies cutting down on their real estate footprint and offices being over supplied, the industry must make big adjustments to boost their businesses.
For example, Houston’s 1550 on the Green office tower is anticipated to open in 2024 and will feature a variety of environmental controls and other smart building tools.
The space will include thousands of sensors across the building’s 375,000 square feet that track movement, occupancy and efficiency. Doing so allows artificial intelligence to analyze data and help tenants have a better look at how the office is occupied, and what developers can do to improve their experience.
Employee Wellbeing Linked To Company Performance
A new survey from insurance firm Aon in partnership with IPSOS indicates there is a close link to wellbeing and company performance.
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The 2021 Global Wellbeing Survey shows that if employee wellbeing is improved, customer satisfaction and retention also improves. However, while overall wellbeing performance is connected to focused strategies within the company, a series of standalone initiatives are not as impactful.
The survey found that 82% of companies found employee wellbeing to be important, with 87% stating they have at least one initiative in place. However, only 24% said they fully integrate wellbeing into their business and talent strategies.
In EMEA, Ireland, the Czech Republic and South Africa are the most likely to have an initiative, while Portugal, South Africa and Switzerland are most likely to have a full strategy in place.
The survey also suggests that company culture plays a significant role in integrating wellbeing into every day operations. But aside from financial investment, employee engagement and interest is the most challenging part of executing wellbeing initiatives.
“Cultures are the seedbeds that determine whether employee wellbeing programmes flourish or die, so companies should assess if their organisational culture is helping or hindering them in their wellbeing and resilience efforts,” said Dr. Avneet Kaur, EMEA Wellbeing Solutions Leader at Aon. “Leadership support and buy-in are critical factors in creating a culture and a wellbeing strategy that can positively impact workforce resilience and overall company performance.”
Could Job Rebound Increase Office Demand?
Although the office market is not out of the woods just yet, Cushman & Wakefield CEO Brett White believes a rebound could be on the horizon.
In a CNBC interview, White expressed optimism about the marketplace thanks to a growth in “transactional velocities” and market activity, which are dependent on vaccination distribution and decreased Covid-19 cases.
Last fall, Cushman & Wakefield saw its office demand fall by 30% more than it did during the Great Recession.
Although there seems to be a glimmer of hope, there is still pressure as companies reveal their commitment to cutting down their real estate footprints. For instance, JPMorgan CEO Jamie Dimon expressed that increased remote working policies will reduce the company’s need for real estate.
Additionally, while demand has grown, vacancies have also increased due to people continuing to work from home for the foreseeable future and ongoing office construction being delivered.
However, research from CBRE finds that 98% of respondents expect to return to the office by the third quarter of this year. While this is promising, it does not mean that offices will return to pre-pandemic occupancy levels.
Cushman & Wakefield believes that the three million jobs that were lost during the beginning of the pandemic will be regained by the fourth quarter of 2021. Again, while promising, traditional jobs are more likely to make up a large portion of this rebound especially with many office-based companies turning to hybrid work models.
How Flexible Work Will Shape Our Cities
City planners and companies realize that, despite the unnerve and anxiety the pandemic has caused, the shift to new work styles has been lauded by many workers. However, the post-pandemic world means more than simply becoming fully remote.
For instance, the 15-minute city design has emerged as a hot trend in recent years. This layout diminishes the need to get in the car and travel for your everyday needs, and instead allows residents to be within walking distance to jobs, retail, food, healthcare entertainment and more.
However, the migration of city dwellers from big cities to suburban areas and secondary cities may make this design more difficult. While it’s still too early to tell if this shift will be for the long-term, places like Atlanta or Los Angeles that are dependent on highways may not be able to incorporate the 15-minute city layout.
Another trend that is becoming more popular is the anchor company concept. While the idea is nothing new (see: Microsoft in Seattle or Dell in Austin), more companies are looking towards this method to grow their homebase, while easily expanding to other areas of the country.
For instance, delivery service provider Shipt is based in Birmingham and continues to operate there despite being told to Target for $550 million in 2017. Doing so helps the city attract more tech-driven entrepreneurs, and contributes to the it’s urban growth.Share this article