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Michael Fraser speaks to Jamie Robotkin about how serviced office space will fare from now on and in the post-pandemic world.

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Michael Fraser

Property Partner

As we enter Lockdown #3, much about future for London office space remains uncertain. In the past year, the world has been stood on its head as all the rules seemed to change. Meanwhile, business as a whole is avoiding making long term decisions. This uncertainty will continue until the vaccine rollout allows “business as usual” to resume.

Having said that, some aspects are gradually becoming clearer. So leaving aside the unknowns, let’s focus on what we know for certain and what we can reasonably assume.

One word comes up time and again in our conversations and that word is “flexibility”. In highly unpredictable, volatile times, flexibility is now more highly valued than ever. In order to survive – let alone thrive – businesses need to adapt instantly to rapidly changing circumstances. Any business decision made this year will be hugely influenced by recent experience – and the need to plan for the possibility of future pandemics.

Flexible office space is set to prosper

In that context, it’s my belief that in the post-pandemic world, flexible serviced office space will prosper – specifically compared to conventionally leased offices. Whilst the serviced office market is certainly not without its own challenges, it seems to be far better placed to meet those challenges than the traditional leased office market.

In the post-pandemic world, flexible serviced office space will prosper. It seems to be far better placed to meet the challenges ahead than the traditional leased office market.

It’s worth asking why we ever took long term leases? Possibly because that was what most landlords were offering, coupled with businesses taking a longer term view than nowadays. These days, however, outside of the big corporates, it’s hard to see many small and medium-sized businesses choosing to tie themselves to a 5 year lease when far more flexible alternatives are widely available.

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Jamie Robotkin

Flexible Office Specialist

Yes absolutely. We’ve seen a general shift towards flex space in the 2–3 years prior to the pandemic, which has acted subsequently as a catalyst. This trend will accelerate as businesses look to minimise risk by opting for short term commitments. Flexible workspace is tailor made for fluid, unpredictable situations, allowing businesses to upsize or downsize their office at the drop of a hat. The effects of the pandemic will make this facility more valuable than ever.

Flexible workspace will allow a business to reorganise quickly – for instance switching to a smaller office, rotating their staff, taking it in turns to work from home for a few days per week.

Flexible workspace will allow a business to reorganise quickly – for instance switching to a smaller office, rotating their staff, taking it in turns to work from home for a few days per week.

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Michael Fraser

Property Partner

That’s a great selling point: it will allow business to enjoy the best of both worlds – maintaining an office so people can work together when that’s preferable, whilst working from home, when that’s more appropriate. Horses for courses. The novelty of working from home is wearing thin and I suspect many would prefer to be office-based – at least for part of the working week. Zoom is a great tool, but it has its limitations.

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Jamie Robotkin

Flexible Office Specialist

Younger people perhaps face the most challenges working from home. Many live in flat shares which must make working effectively impossible. Who wants to work all day perched on the end of your bed with your laptop?

Working collectively is vital for business success and career development

Of course for many jobs working collectively is vital. When I started my career, I wouldn’t have learnt half of what I know now if I’d worked from home. Passive learning is so important: I used to pick up skills and knowledge subconsciously, just by half-listening to a more experienced colleague on the phone. That wouldn’t happen when working apart.

I am also acutely aware that whilst working from home can offer some freedoms and a better work/life balance, it can also have a negative impact on mental health. So you are absolutely right, Zoom is fine but only up to a point! Businesses will continue to place great value on their people working together in the same environment – albeit on a more flexible basis.

Passive learning is so important: I used to pick up skills and knowledge subconsciously, just by half-listening to a more experienced colleague on the phone.

 

How will social distancing compliance affect the use of office space?

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Michael Fraser

Property Partner

With that in mind, I can see companies continuing to take new offices, but the way they use their space will evolve. Social distancing would require you to reduce your staff numbers by 50% to maintain the same amount of pre-Covid space. So what is more likely: taking more space for more people at lower density or keeping your existing space with only 50% of the people there at any one time?

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Jamie Robotkin

Flexible Office Specialist

So far, not many tenants have taken larger space. Instead, they have retained their current office with fewer staff using the space at any one time, the rest working from home on a rotational basis.

Of course, the vaccine is a the game changer. How much social distancing will be necessary as the rollout progresses? Some experts are predicting we will still need some social distancing next winter, despite the vaccine. In those circumstances, businesses can continue with their existing space, perhaps only accommodating 70–80% of their team on any given day, with the rest working from home.

What will happen to serviced office rents?

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Michael Fraser

Property Partner

That will have cost implications with fewer people using the same amount of space. Is there an expectation amongst tenants that London office rent will come down as a result?

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Jamie Robotkin

Flexible Office Specialist

It’s a mixed bag depending on the tenant and provider. Many agents were expecting a downward shift in rents, but that hasn’t yet happened. Quoting rents have been static all year. Having said that, there is far more flexibility in negotiations with greater discounts on offer than usual. So in the end, rents being paid are lower than usual.

The predicted downward shift in quoted office rents hasn’t yet happened. But there is far more flexibility in negotiations with greater discounts on offer than usual. So in the end, rents being paid are lower than usual.

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Michael Fraser

Property Partner

There’s that word “flexibility” again…

Is flexibility now more important than control over your corporate image?

Many companies have large, smart offices with a strong commercial image. But these are typically on traditional long term leases. Do you think that some of these companies will be prepared give up this commitment in favour of more fluid serviced space? Trading control over their image for flexibility?

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Jamie Robotkin

Flexible Office Specialist

Large corporates won’t give up their London HQ unless they are specifically downsizing their business. However, smaller and medium sized companies may well decide that flexibility does indeed trump image control.

Working from “near” home?

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Michael Fraser

Property Partner

Much has been written about the explosion of residential values in rural settings during the pandemic, with people moving away from London. We can reasonably conclude that – despite our misgivings – many are intending to continue working from home on a long-term basis, rather than return to their daily commute to the capital.

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Jamie Robotkin

Flexible Office Specialist

Interestingly, I’ve noticed a shift towards a “work from near home” concept, where some SMEs are taking short term, flexible spaces away from Central London. People that can’t or don’t want to work from home, can now live within walking or cycling distance of their office – or even a short drive, with parking more likely to be available in provincial locations. I suspect we will see more of this in the next 12 months. However such businesses will still maintain a base in London albeit on a slightly smaller, more flexible basis.

I’ve noticed a shift towards a “work from near home” concept, where some SMEs are taking short term, flexible spaces away from Central London. I suspect we will see more of this in the next 12 months.

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Michael Fraser

Property Partner

We will shortly be launching a new website – taking the Find a London Office concept and applying it to the rest of the UK. So if you’re looking to relocate some of your people away from London, you’ll soon be able to search for available serviced office space throughout the UK.

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Jamie Robotkin

Flexible Office Specialist

I am working with various serviced office providers at the moment, all of whom are focusing on regional, “work from near home” locations. For the first time these providers are actively acquiring space in town centres and high streets. One provider I am working with is looking for disused retail units in high street locations with high footfall. They are looking to offer a unique concept that mixes different offerings alongside the typical coworking, private office, meeting room and break-out area offerings. These will include a food and beverage offering (hence the retail frontage), as well as wellness studios and gyms. It’s an interesting innovation.

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Michael Fraser

Property Partner

It’s yet another example of flexible thinking: adapting disused retail space to our rapidly changing times. In fact, recent modifications to the classification of commercial property uses will make this a great deal easier. Class E now allows vacant shops to be converted easily into office space – far better than the previous convoluted process. Ian Kitchener will be writing more about this in due course.

I think we can conclude that while much is still clouded in uncertainty, flexibility is the watchword for the modern business. More than ever, business will want to minimise their exposure to risk in a hugely volatile environment. Having the ability to adapt quickly and with minimal disruption will be the key to surviving and then thriving. Flexibility will also be required at an organisational level, with more staff preferring to work from home where possible, whilst also retaining a central base for people to work together.

Serviced office space is a perfect match for this shift in priorities. And with serviced office providers now investing in regional property in accessible locations, the options for the modern, dynamic business are really starting to open up.

Serviced Office Space: flexibility is the watchword

Serviced Offices Location Guides

We have serviced office location guides for each of our 19 London locations:

Many business centres also offer coworking space, meeting rooms and virtual offices.

For more general information about flexible office space, please see our Serviced Offices in London guide.

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