Comment: How will businesses reappraise their space needs?

14th July 2021 | 7 min read

By Dotan Weiner, LABS Chief Operating Officer 

As businesses return to their offices they are faced with a challenge – how do they reappraise their space requirements post-Covid? Social and technological advancements are changing real estate from being a fixed physical product, into flexible, employee-centric spaces that enable new models of hybrid working and business operations.  These have a significant impact on the ways that businesses work and the options available to them.

Leasing arrangements need to be futureproof

With various organisational theories and business models being discussed in real-time, for every company, the experience and path they take is going to be unique for each one.  Currently, it is still too early to predict the long-term implications of the changes to working practices, therefore leasing arrangements must be futureproof.

The key point is a company’s headquarters is central to enhancing individual and collective productivity, supporting the company’s culture and nurturing employees’ skills, creativity and growth, even more so when the time spent working-from-home is more significant than before.

Businesses are keen to return to operating from an office space. It has been an extraordinary 18 months, where the pressure of home working has had numerous detrimental effects.

60% of those questioned reported concerns about diminishing staff wellbeing, while over three-quarters of respondents reported difficulty collaborating as a team and a lack of staff cohesion according to a survey conducted by LABS.

From conducting internal surveys, we learned our tenants and serviced office clients have reported concerns about diminishing staff wellbeing, difficulty in collaborating well as a team, and a lack of staff cohesion as employees struggle to connect as effectively as they would do in person. Working-from-home fatigue has been rife. Contrary to some predictions raised a year ago, the office has regained its place of importance in the company operating system.

LABS survey findings

Our internal survey has also revealed further insight into the shape of the working environment. During the pandemic, we had discussions with 80% of our tenants which illustrates the importance of the workplace. 60% of those questioned reported concerns about diminishing staff wellbeing, while over three-quarters of respondents reported difficulty collaborating as a team and a lack of staff cohesion, as employees struggle to connect as effectively as they would do in person.

So it really is evident that flexibility is absolutely central to many businesses’ plans, something 90% of our clients claimed. Not just in its original meaning of shorter occupational terms, but in the wider aspect of flexibility for the end-user inhabiting the working environment.

Even before the pandemic, we had already witnessed a growing demand for flexible, fully-fitted solutions with real estate functions that can be outsourced, but this trend has been accelerated by Covid, with more businesses opting to redesign spaces to accommodate multiple models of working and collaboration.

The fabric of office space will change

A positive finding from the recent Knight Frank (Y)OUR SPACE report, which drew on responses from almost 400 international businesses, was that over the next three years, 47% of firms will seek to improve the quality of the space they occupy, with 46% looking to improve the amenities available to employees within the workplace. 55% of respondents said they will create more collaborative spaces within their offices and 54% said they will implement desk-sharing or ‘hot desking’ over the same period.

At LABS we have seen a marked increase in the occupiers’ market for quality, amenity-rich offices which include spaces that support physical and mental wellbeing, such as collaborative lounges or breakout spaces. Our team of designers and workspace professionals have been forecasting these occupational trends and requirements and developing a new range of innovative space solutions to accommodate this.

It is the desire for better utilisation of space that led occupiers such as Bonnier Books UK and technology consultancy Wipro to take space in our newly refurbished Victoria House scheme. Victoria House was launched with different occupational models such as ‘blank canvas’ Grade-A office space, customised plug-and-play options and fully serviced offices, alongside a vast range of amenities and hospitality features under one roof, boasting a bar, gym, roof terrace, and 8,000 sq ft of lounge and club space designed for meeting and collaboration. The emphasis is not only on the physical handover of a space to its occupiers, but the management of the ongoing operations of a Grade-A, hotel-like, amenities-rich building.

Bonnier Books goes down serviced route

Bonnier Books has adjusted its office footprint from 20,000 sq ft in a traditional lease to an 8,000 sq ft serviced solution – a good example of a company which reviewed their space needs and requirements in the current climate.

HR director Anna MacLaren May says: “I think the majority of us have found the amount of time we spend on screen can risk being quite draining and we’ve realised how important it is to take breaks, be around people, and to just have that opportunity for a spontaneous conversation during the working day. We’ve all missed having friends and colleagues around us and being part of a team.”

She says that Bonnier Books UK had plans to introduce a new flexible working policy before the pandemic and the new policy allows everyone to work from home for up to three days a week. This has received positive feedback across the organisation and alongside the prospect of the new office space, she says people seem genuinely excited about being able to strike a balance between working from home and coming into the office.

Across the board, companies must consider the effects of hybrid working on their space needs, adjust their real estate strategy with this in mind, and plan correctly to allow growth and expansion, while keeping their occupational costs efficient.

I think the majority of us have found the amount of time we spend on screen can risk being quite draining and we’ve realised how important it is to take breaks, be around people and to just have that opportunity for a spontaneous conversation during the working day. We’ve all missed having friends and colleagues around us and being part of a team.

The advantage of taking space in a building that offers both serviced and more traditional occupational models is that it gives the occupier expansion options, either for a one-off project or for the natural growth of a successful company.

At Labtech and LABS, we offer modernised concepts of space flexibility and hybrid working solutions. While there is still significant demand in the market from corporations taking large spaces for long periods in order to establish their brand at a certain location, we see stronger and stronger demand to occupy quality, high-end space with more flexibility and rich amenities. We’ve seen a real uptick in leasing appetite, with our sales team hosting 20% more viewings of LABS spaces each week than pre-Covid. In April, we signed our highest ever volume of new deals in a single calendar month.

It’s about more than productivity

We are working closely with our tenants and serviced office clients to understand how they are going to be operating, be it hybrid or office-based working, and are formulating design solutions which might help them. It is this level of interest in occupiers’ businesses that will lead to the inception of environments that actively support them.

A workspace provider has to understand and respond to the evolving requirements of the occupier market, developing occupational models and arrangements that meet current and future needs of occupiers.

Getting back to the office is more than about pure productivity: it is about engineering a real and tangible culture, which helps employees pull together with common goals. If the pandemic has taught us anything, it is that being together is good. Without physical headquarters, we risk becoming a disconnected, distracted society where creativity and collaboration are seriously hampered. However, the way the office is utilised and supports the working day is going to be key for businesses.

Published versions by React News and Workplace Insight