As businesses embrace hybrid working in the wake of Covid-19, how they use office space is set to change for good. Here, we explain why the shift represents an exciting opportunity for commercial and retail landlords.
As Covid-19 vaccination programmes around the globe allow companies to reopen their offices, it’s clear that, for many, these spaces won’t serve the same purpose as in pre-pandemic days.
Long periods of lockdown forced businesses to allow more remote working than ever before, driving home the benefits of reduced commuting and increased flexibility. For people, improved work-life balance has meant better health, more time with friends and family and even increased professional productivity. For businesses, the reduction in travel has helped to cut carbon emissions, and in some cases prompted cost-effective decisions to downsize real estate footprints.
Hybrid working is the preferred way forward for employers and employees alike. This approach – which allows employees to split their time between home, the office and a third location such as a nearby flexible workspace – combines all the benefits of staying local with the boost of occasional trips to the corporate HQ for collaboration and connecting.
According to the UK’s Office for National Statistics, 85% of adults who worked from home during the pandemic would prefer not to go back to the office full time. Meanwhile, a study by PwC revealed that only 8% of respondents expected to return to the corporate HQ five days per week.
For commercial landlords, this might seem worrying. But, as the new normal takes shape, it is also throwing up exciting opportunities.
The case for flexspace
Canny property owners and investors are now choosing to partner with flexible workspace providers such as IWG. With a stable of brands including Regus and Spaces, IWG provides the kind of office space that businesses are looking for, post-pandemic: customisable, professional and scalable at short notice.
Knight Frank’s 2020 Re-occupancy and Re-imagined Workplace survey shows that 47% of UK businesses (including large, established enterprises) plan to incorporate flexible office space into their future real estate strategies. So far in 2021, IWG has inked enterprise deals with corporates including NTT, Cisco and Standard Chartered bank. Altogether, such partnerships have brought two million new users to its global network of flexspaces.
The rise of the multi-functional high street
As businesses shift their focus to providing office locations near employees’ homes, demand for flexible workspace in small towns and neighbourhoods is growing. According to IWG data, enquiries about flexspace in suburban and rural areas grew by 32% and 20% during the first quarter of 2021, compared to the same period pre-Covid-19.
What’s more, for long stretches of the past 18 months people have been forced to stay local – with the result that they’ve rediscovered nearby hidden gems and the joy of walking or cycling.
“We know it is better for people to work near to where they live,” says Professor Carlos Moreno of Paris’ Sorbonne University. “If they can go shopping nearby and have the leisure and services they need around them, too, it allows them to have a more tranquil existence.”
Moreno’s ‘15-Minute City’ theory proposes that governments can improve people’s quality of life by creating neighbourhoods where everything a resident needs can be reached within a quarter of an hour on foot or by bike. Along with the idea of ‘livable towns’, the concept has made it on to political agendas around the world: it is already informing planning in places as diverse as Brighton, Paris, Portland and Oregon.
The richer mix of amenities on British high streets will help to reinvigorate them, and flexible workspaces will play a vital role in bringing sleepy communities back to life. The development of void retail units into flexspace will help to meet demand for local offices, but also create a virtuous circle of custom – feeding, and being fed by, local cafés, shops, leisure centres and restaurants.
“Just when local cities and towns seemed to be dying,” says IWG Founder and CEO Mark Dixon, “Covid-19 may have come along and saved them. The realisation of the 15-Minute City will be one of the most dramatic and long-lasting legacies of the pandemic.”
Why mixed-use property makes sense
In a world where convenience seems increasingly important, it’s no surprise that landlords with large premises are putting them to multiple uses – in some cases incorporating flexible workspace alongside cafés, bars, retail units, gyms and even residences.
In Napa Valley, IWG’s Spaces brand has opened a new kind of flexible workspace. Set in a bustling downtown development rather than a traditional office building, the cutting-edge Spaces Napa is surrounded by restaurants, shops and leisure facilities. Meanwhile, in Bogotá, Colombia, a new Spaces location is set to open in one of the city’s most popular shopping malls.
In Brazil, a new franchise partnership between IWG and investor Marcelo Borborema will see the launch of two new flexspaces in Osasco, a district of São Paulo. The first will be a 1,000sqm centre on Osasco’s main avenue, inside a building that also houses a hotel. Borborema believes this will be an added attraction for flexspace customers who might need a place to stay – but also that hotel guests are the perfect market for coworking or flexible office space.
Diversifying the use of a building also diversifies risk – a key consideration as the world’s economies begin the long road to recovery after Covid-19. Bringing flexible workspace – which serves a growing market – into a building that also features more traditional retail or hospitality outlets, is arguably a smart move in the current climate.
For many landlords looking to break into the flexible workspace sector, IWG’s scale and heritage make it the ideal choice. Founded more than 30 years ago and with 3,500 locations around the world, it offers a variety of workspace brands that cater for different types of customers across the globe.
Offering bespoke office solutions for businesses of all sizes, IWG can support landlords with developing, marketing and managing their properties to achieve impressive returns in the new world of work.
Flexible workspace is the fastest-growing sector of the global workplace market. Make the most of this exciting investment opportunity by partnering with IWG today.