What lies in stores for the office market?
The office isn’t over, it’s just going to be different.
Since the end of lockdown 1.0 the office market has been surprising, to the extent that a number of transactions have taken place where the take up in Watford will exceed the total for 2019 by the end this year. Activity has been more muted in Hemel Hempstead, but transactions of reasonable scale have occurred in the wider area. For example, 35,000 sq. ft. in two transaction since May.
St Albans has seen less activity, but this is a market with lower levels of stock anyway. The rumoured large relocation in progress in St Albans is apparently looking less solid and it is possible that the BF letting and re-gear to Skechers at Centrium in Holywell Hill, will be this years’ highlight.
It would however be fair to say that this demand across the wider region has been driven by factors in play prior to the virus, including lease events, corporate purchases and consolidation that even the virus could not halt. Where this has not been the case, the companies involved have in some cases been health related beneficiaries of the pandemic.
Surprisingly, rents in a headline sense have stayed firm with rent fees being in some cases adjusted modestly to account for possible deferred occupation.
If that’s the story so far what does the future look like?
The conjecture in the wider market suggests a variety of outcomes, some apocalyptic (the end of the office) and some even beneficial to locations like our core towns (the hub and spokes model) but the truth is that no one really knows at this point what type or scale of office they will need and where it’s likely to be required.
We can assume that there will be a greater acceptance that working from home is possible and that it is not a licence for loafing. Interestingly, the younger generation are, in my experience, the most likely to be disciplined about work outside the office. Certainly, a number of companies have indicated they do not expect attendance 9-5, 5 days a week, whatever the pandemic outcome.
That said, a lot of people particularly those who are starting out their career or whose home environment is cramped with little or no outside space, have not enjoyed working from home and have realised the benefits of the office environment in terms of mental well-being, professional and career development as well as the social side (how many readers met their partner at or through work?).
What seems likely is that offices will need to be attractive enough to make them worth travelling to and, post covid, we may see more need for social space in and around offices. Touch down facilities that don’t involve travel to an office but an office environment may become more widely used (provided we can have that degree of interaction going forward.)
Office hours are also likely to be more fluid as those who can, will choose to travel outside peak time. Presenteeism will most likely be less important, but the office isn’t over, it’s just going to be different.