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Homeworking post-COVID-19: Flexibility for workers or a means to cut business overheads?

Post-COVID-19, there has been widespread speculation in the property industry over whether office occupational demand will change. The pandemic has accelerated changes in the way offices are used as well as in what office users demand in terms of office layout.

Is the office workplace becoming smaller, different or are we just returning to pre-pandemic normal? In 2021 alone, office properties worth DKK 19 billion traded in Denmark, and the question is therefore relevant to investors and businesses alike.

Many market players are grappling with the answer, and Colliers therefore conducted a survey at the start of the year, asking this and many other questions of 357 respondents, mainly Danish business managers.

Before proceeding to the responses, let us highlight three factors to potentially affect the demand for office space

  • Increased use of homeworking
  • Stricter social distancing requirements between workers to reduce infection risk
  • Increased demand for premises to conduct virtual meetings from, e.g. to facilitate collaboration between co-workers working from the office and co-workers working from home.

Businesses in office-intensive sectors increasingly opt for homeworking. This in itself indicates that the office area requirement per worker will drop. 

Conversely, stricter social distancing requirements and the demand for more premises from which to conduct virtual meetings potentially signal an increase in the office space requirement per worker. What then is the net result?

The office area requirement per worker will remain largely unchanged in the long term

Figure 1 shows that 30% of respondents expect the office area requirement per worker to decrease in the long term, whereas the remaining 70% expect it to remain largely unchanged or increase in the long term.

However, the respondents’ expectations of future office area requirements are seen to differ if we consider which line of business they belong to.

Mainly the “Financing and insurance” category stands out: In this category, all of 47% of respondents expect a decrease in the office area requirement per worker. In the other categories, only 22-26% expect a decrease in the office area requirement per worker.

 

Representing the “Financing and insurance” category, Danske Bank and insurance company Codan have already downsized their office premises on account of increased homeworking.

In 2021, Danske Bank terminated 55,000 sq m of its office lease across four Greater Copenhagen locations, corresponding to an office space reduction of some 25% in the area.

In connection with its Copenhagen head-office relocation, Codan likewise reduced its office premises, leaving only 575 workstations for 800 staff, with workers required to book an office workstation before going to work.

Large workplaces often encourage homeworking

In the following, our focus is on corporate homeworking policies as far as in-person office attendance is concerned.

Figure 2 shows that 21% of respondents’ workplaces discourage homeworking, whereas 17% of workplaces encourage homeworking. The remaining 62% of respondents’ workplaces leave it up to the workers to decide if they want to take homeworking days.

Figure 2_What is the approach to homeworking_UK

In addition, Figure 2 shows that large workplaces have been more inclined to embrace homeworking. Among respondents working for businesses with a headcount of 500+, more than 40% state that their workplace encourages workers to take homeworking days.

Large workplaces more involved in the scheduling of homeworking

There may be multiple reasons why a workplace permits – or even encourages – workers to work from home:

  • To cut costs by reducing office space
  • To offer workers flexibility
  • Out of necessity, as was the case during the COVID-19 lockdowns.

The way workplaces arrange for their workers to work from home depends on their motive for offering homeworking in the first place.

Let us zoom in on the first two reasons listed above, that is, the reasons that the workplace is able to control: If the objective is to cut office rent expenses, it is ideal for the workplace to decide when workers are to work from the office, and when they are to work from home.

In this way, the workplace can even out the number of workers present in the office over the working week, thereby reducing the required number of workstations.

However, if the objective of offering homeworking is to provide workers with a flexible workday, it is ideal for the workplace to leave it up to the workers to decide when to work from the office, and when to work from home.

By allowing the workers this flexibility, the workplace is less free to reduce the number of workstations. Imagine, for instance, that many workers turn up at the office on Thursdays but opt for homeworking on Fridays, making it necessary for the workplace to retain a certain buffer of workstations to seat everybody even on popular office days.

What we see is therefore a “trade-off” between flexibility for the workers and the possibility of the workplace achieving optimum office space utilisation.

It is relevant for office landlords to know if businesses that permit homeworking do so to ensure flexible working conditions for the workers or to be able to reduce office space.

To explore this, we asked all respondents citing that their workplace is in favour of homeworking (that is, the workplace leaves it up to the workers to decide if they want to work from home, or even encourages homeworking) to state who decides when to schedule homeworking days, if any.

Figure 3 shows that 50% of the workplaces in favour of homeworking leave it up to the individual worker to decide when to schedule homeworking days, if any, 44% leave it up to the various departments/teams to decide, while only 6% opt for corporate-level planning of homeworking days.

This indicates that the homeworking option is not a means to cut business overheads in the vast majority of workplaces; instead, it likely reflects a focus on offering workers flexibility.

The approach of leaving it up to the various departments to decide when to schedule homeworking days could be perceived as the middle ground between two opposing extremes.

Here, the coordination of homeworking rests with the individual department, making it possible e.g. to bring together teams to facilitate collaboration.

This gives the business some control over workplace attendance, while presumably also to some extent considering the wishes of the individual worker.

Figure 3_Who decides_UK

Moreover, Figure 3 shows that large workplaces are less inclined to leave it up to the individual worker to decide when to schedule homeworking days, if any.

Seeing that large workplaces to a greater extent control the scheduling of homeworking days, coupled with the knowledge that large workplaces very much encourage workers to opt for homeworking, it is fair to assume that large workplaces stand the best chances of reducing office space requirements per worker should they want to do so.

If we break down Figure 3 responses according to business sector, the “Financing and insurance” category stands out again. In this category, only 33% of respondents state that it is up to the individual worker to decide when to schedule homeworking days, if any.

Due to the low level of individual worker participation in the scheduling of homeworking days in the “Financing and insurance” category, businesses can plan workplace attendance on any given day, with homeworking making it possible to reduce the number of workstations.

In the “Financing and insurance” category, the low level of worker participation in the scheduling of homeworking days therefore tallies with this category’s overrepresentation of respondents that expect the office area requirement per worker to decrease, as shown in Figure 1.

Conversely, the survey reveals that workers in the “Business services” category enjoy the highest degree of flexibility and influence with respect to the scheduling of homeworking days.

In this category, all of 66% respondents state that the individual worker is free to decide when to schedule homeworking days. This category includes law firms, accountancy and bookkeeping, business consultants, architects, consulting engineers, advertising agencies, etc.

Homeworking best facilitates focused concentration

Finally, we asked the respondents to state how their workplaces view homeworking as opposed to working from the office in terms of productivity.

The respondents were instructed to modify their responses according to whether the tasks in question require focused concentration by one individual or a continuous team effort.

Figure 4 involves tasks that require the focused concentration of one individual: Only 13% of respondents believe that their workplace considers homeworking to be less productive than working from the office as far as this kind of task is concerned, whereas 28% believe that their workplace considers homeworking to be more productive than working from the office when tasks require the focused concentration of one individual.

The remaining respondents state that homeworking is as productive as working from the office. In addition, Figure 4 groups the responses according to the previous question as to whether the workplace encourages homeworking or discourages homeworking.

As expected, the workplace perception of homeworking productivity being higher when involving tasks that require focused concentration is more prevalent among businesses in favour of homeworking (that is, they leave it up to the workers to decide whether to opt for homeworking days or even encourage homeworking).

Figure 4_How is homeworking_UK

Working from the office best facilitates a team effort

Figure 5 involves tasks that require collaboration and a continuous team effort: 68% of respondents state that their workplace considers homeworking to be less productive than working from the office when it comes to tasks that require a continuous team effort.

Workplace consensus therefore has it that homeworking is suited for tasks that involve a single worker but less suited for tasks that require a team effort.

When we break down Figure 5 responses according to how much the workplace favours homeworking, this figure (like Figure 4) shows that the workplace perception of homeworking productivity being higher when involving tasks that require a continuous team effort is more prevalent among those businesses that are in favour of homeworking. 

Figure 5_How is homeworking_UK

It is remarkable that among the workplaces encouraging workers to opt for homeworking, all of 46% believe that homeworking impairs work productivity if tasks require a continuous team effort and collaboration.

Seeing that even the workplaces encouraging homeworking widely believe homeworking to impair work productivity when collaboration with co-workers is required, there is nothing to suggest that the office workplace may be fully supplanted by homeworking.

Conclusive remarks: the office workplace is here to stay

According to the findings of the survey, 79% of workplaces permit workers to opt for homeworking. At the same time, 70% of office user respondents expect the office area requirement per worker in their workplace to remain largely unchanged or increase in the long term.

Only 6% of workplaces in favour of homeworking opt for corporate-level planning of homeworking days. This means that businesses are generally unable to control office attendance, forcing them to retain a buffer of workstations to seat all office workers even on popular office days.

This indicates that the workplace approach to homeworking is motivated more by a desire to offer workers flexibility than by the desire to reduce office space.

The increased flexibility that workers enjoy due to the homeworking option could well be seen as a competition parameter intended to retain and attract workers.

However, the findings of the survey also indicate an overrepresentation of large workplaces, mainly in the “Financing and insurance” category, that have implemented homeworking policies allowing for office space reductions.

Finally, the survey shows that most office users find that homeworking is less productive than working from the office when it comes to tasks that require a team effort and continuous collaboration with co-workers.

All in all, this indicates that office premises will be relevant also in future as they allow co-workers to meet in order to exchange ideas and collaborate.

Read more news from Colliers here.


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Gregers Nytoft Rasmussen

Head of Research

Copenhagen

Gregers is responsible for Colliers’ Danish research function. He has a strong track record with project management of data-driven research, and his primary tasks are related to preparing statistical and econometric analyses.  

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