Is your office too big?

Adrian Howard
July 2, 2020

Your office requirements could be permanently altered after the pandemic

The onset of Covid-19 forced most companies to swiftly move their operations out of the office. After a few initial teething problems, it has transpired that, for many, working at home has been a smooth process. People have quickly adapted to using software such as Teams, Google Hangouts, Zoom and Trello, with productivity in many cases rising and quality of work unaffected.

But with many countries now starting to lift lockdown restrictions, what will the return to the office look like? Social distancing means we can’t return to business as usual. As working from home has been so successful, will companies decide to reduce the size of their workspaces, or even not return to the office at all?

Lewis Beck, EMEA Head of Workplace for CBRE, a real estate services and investment firm, believes that many companies will look to change their office space following the pandemic, with some even needing to increase their office footprint, following a long-term redefinition of maximum occupancy. He says that we are likely to see a “rationalised physical footprint, made up of a different composition of space that is higher quality and better-equipped to support employee needs”.

Lewis adds: “The shift we envisaged towards a more fluid workplace anchored by a high quality headquarter space and supported by a network of smaller locations will become a reality more quickly than anticipated pre-Covid-19.”

Renegotiating a lease

But if you’re in the middle of a lease agreement, will it even be possible to make significant changes to the amount of space you have – and pay for?

In the current circumstances, your landlord might be open to renegotiation talks, but Steven Porter, Head of Commercial Property at JPC Law, points out that if a landlord refuses to negotiate revised terms, there is no legal mechanism at present to force the issue. If permitted in your lease, subletting could be an option, if a subtenant that is acceptable to the landlord can be found. “Early dialogue is key,” says Steven. “Most importantly, if an adjustment is agreed with the landlord it is essential that it is documented to avoid any future misunderstandings.”

Estate agency and property consultancy Knight Frank says it has not seen many companies looking to downsize or renegotiate their leases so far, unlike in the aftermath of the 2008 financial crash when many businesses sought to get rid of office space.

“There’s certainly been a lot of talk about the ‘death of the office’,” says William Matthews, a partner in the capital markets research team at Knight Frank. “But I think in the long run people do want to go back to the office – maybe not sticking rigidly to five days a week as we might have done before, but I don’t think it necessarily means we’ll need less office space.

“Before the pandemic, we all built up a degree of social capital with our colleagues, and without a central office where people can come together, this social capital could be eroded over time. So, having an office is almost even more important in the long run than it was in the past.” He also points out that having an office space that is appealing to employees will continue to be important in helping to attract and retain the right staff.

Changing spaces

Rather than moving away from offices altogether, William thinks firms will start to focus more on certain aspects, such as office location. Many employees will want to minimise their journeys into work, so employers might want to ensure they are located close to major transport hubs. And he suggests that firms might look to lease flexible spaces on the periphery of larger towns in order to limit their employees’ commuting time.

But overall, keeping an office space – albeit possibly a smaller space than previously – still has much to recommend it, he says. “When it comes to innovation and thinking about new business and products, it’s harder to do that when working from home,” says William. “Often people do need to be together to do more interesting, innovative work. That, for us, is a key facet of what an office can and should provide.”

Even if you do decide to return to office-based working, Lewis suggests that open-plan offices may need to be reconsidered to some degree. Companies could “compartmentalise”, creating a mix of open and enclosed spaces that will assist with limiting germs’ spread.

“Occupiers will place a stronger emphasis on building specifications and healthy workplace features as they focus on employee health to preserve long-term productivity,” says Lewis. “Long term, we’ll see a preference for buildings with ‘healthy’ credentials related to indoor air quality and ventilation, as fresh air reduces the spread of airborne germs. Currently, buildings are required to comply with a minimum 20% fresh air intake, while some choose to exceed this requirement by going up to 30%. Revisiting the minimum requirement may be a next step for facility operators.”  

If you are planning to bring staff back into the office in the medium term, it may not be possible for all your people to return to work at the same time. You should consider putting a one-way system in place, introducing phased occupation and shifts in order to ensure staff are spaced at a suitable distance from one another, and ensuring santation products are available.

Covid-19 is changing the way we think about work and entrepreneurs may have to think more flexibly about their physical spaces and staff working to take advantage of opportunities in the post-covid environment.

The opinions expressed by third parties are their own are not necessarily shared by Orestone Wealth or St. James’s Place Wealth Management.