As companies adopt hybrid ways of working, they’re relying on brokers for expert guidance. Here, we explore the growing trends to consider when choosing office space.

Covid-19 has been a “game changer” in the world of commercial real estate, according to IWG Vice President Network Development, Americas Michael Berretta.

The shift away from long-lease permanent offices had been growing steadily years before most people had even heard of the virus, he argues, but the pandemic has catalysed the hybrid working revolution. Now, as countries unlock, there is renewed and urgent demand for flexible workspace.

Berretta has been tracking changes in the world of work for some time, and claims that – if it wasn’t obvious pre-pandemic – it’s now painfully clear that the traditional real estate model is becoming outdated.

He identifies a two-part shift: the first being an increased appetite for highly flexible licence agreements and the second the adoption of hybrid working practices. The benefits of the latter, which became apparent during the health crisis, mean its popularity among businesses is not surprising.

A new world of work

Berretta says the most obvious advantage of hybrid working is improved time management. “You’re not wasting time getting places,” he explains. “And you have a completely customisable work schedule.”

He goes on: “I think that the leaders of companies are realising, especially today, that they have to keep their workers happy, they have to attract top talent – but they also have to get a return on the investment they’re making with their employees.”

Productivity is key to achieving that return, Berretta explains, and a person’s “productivity level is in parallel with their workplace environment”. In other words, happier employees with a healthy work-life balance are more productive than those who spend hours each day on unnecessary commuting.

Adoption of the hybrid model also allows companies to reconsider their need for office space – and scaling back or choosing a new kind of real estate can lead to significant cost savings.

Nevertheless, says Berretta, some executives are nervous about embracing the new world of work. As a result, brokers have a vital role to play in helping clients as they make the transition to hybrid ways of working. Berretta explains that, in sharing their expert knowledge of a changing market, they can reassure business leaders of the very real benefits that come with embracing the change. 

Mixed use property and ‘close to home’ options

In a new, hybrid world of work, the function of corporate offices will change. At the same time as downsizing HQs, firms are already investing in flexible workspaces in rural and suburban neighbourhoods that are near employees’ homes. According to IWG Founder and CEO Mark Dixon, “During the past two years in the UK alone, IWG has opened almost all its new centres in non-city-centre environments. Today, we are seeing demand for suburban locations increase exponentially around the world.” 

The move to a ‘hub-and-spoke’ model of working – where companies keep their headquarters but operate multiple regional offices – plays into the concept of the 15-Minute City. This ideal, which is already informing policymaking around the world, envisions neighbourhoods where everything a person needs can be accessed within 15 minutes on foot or by bicycle.

As the hybrid working trend continues to gain momentum, Berretta believes commercial property owners will also recognise the shift in customer demand. Ultimately, he says, they’ll come to accept that a coworking or flexible workspace needs to be offered as standard in their buildings. What’s more, he predicts that landlords will opt to run such spaces in partnership with seasoned operators such as IWG.

Different by design 

At the same time as calling for less permanent office space, Berretta says the hybrid model is likely to impact office design. “As companies institute a hub-and-spoke or a hybrid working mentality, offices will need to be highly convertible. A section of an office or an area within an office might be used by different people throughout the course of a day,” he explains. 

“Where previously in a traditional office model there may have been a static, dedicated group of people using one part of the space, now it has to be much more adaptable,” Berretta says. “Over time, [that will] impact the design, look and feel of offices.”

Integrated technology

Berretta also predicts that the remote working technology we’ve all become accustomed to using at home – platforms such as Zoom and Microsoft Teams – will be integrated into the fabric of office spaces.

Enhanced hygiene measures may also be important post-pandemic. People have a heightened sense of vulnerability thanks to Covid-19, and businesses are more aware than ever of how the threat of illness can dramatically affect operations. 

A more flexible future

So does hybrid working spell the end for medium- and long-term leases? Berretta says that, all things being equal, anyone would choose flexibility over a burdensome long-term commitment – but he points out there is always a balance to be struck in real estate.

“Decision makers want to capitalise on pricing, and therefore may want to lock into a rate for a longer-term lease,” he says. “So I think there’ll [always] be a certain amount of space on medium- or long-term lets. [However], probably a smaller amount than was historically seen, with a new focus on a higher percentage of space being offered as a flexible alternative.” 

Right now, Berretta says, the best brokers are not just placing customers to earn a transactional fee or to get a deal done. Instead, their objective is to understand a client’s needs and help them to find what they’re looking for. Often, that’s a high-quality office environment they can access on flexible terms.

“Customers don’t want to make a long-term 10-year investment in a building,” Berretta explains. “They just need to figure out how to put 50 or 100 seats in a particular area immediately, and they [may] only need it for a couple of years.” In the traditional commercial property world, he says, such deals do not exist – “So [top] brokers are taking that consultative approach [and] aligning with a flexible workspace provider like IWG.”

Discover how IWG is helping thousands of brokers across the world find the right office space for their clients.