The COVID-19 pandemic is acting as a trigger for workplace transformation with most major companies now seeking greater flexibility, new data from global real estate advisor Colliers International has revealed.
A survey encompassing insights on market dynamics from Colliers clients around the world has shown that fundamental changes to the way in which people work and the places within which they work are already underway.
The latest survey is based upon data from over 250 major Occupier Services client accounts and shows that 67 per cent are now seeking a more flexible workplace model, including co-working and working from home.
Andrew Hallissey, Executive Managing Director of Occupier Services, EMEA, at Colliers International, said: “The office HQ has never been more important but firms are now exploring more distributed working models for their employees.
“More flexible workplace models are being sought by 67 per cent of businesses and there is a strong desire for more flexible and shorter lease terms.”
He added that the research showed how COVID-19 was already transforming the workplace and predicted that this was just the start of far-reaching changes that would affect real estate for many years to come.
“This is just the beginning. We know there has been delayed decision making as a lot of large corporates have been rethinking their future workplace models.
“Working from home has been a great success, but there is huge pent-up demand for people to get back into the workplace, not just because it helps create a strong, compelling company culture but because people are inherently social beings and it is important for them to be able to collaborate in person.
“The changes that are coming will bring many positives but will require careful planning to ensure they are successfully implemented. There will be more choice and flexibility for individuals as to where they work and how they work.”
The Colliers International Occupier Services survey has insights from nine major industry sectors. These are: Technology, Media & Telecoms; Heavy Manufacturing & Distribution; Consumer Products; Professional Services; Healthcare; Financial Services & Insurance; Life Sciences; Government Contracting & Defence; Utilities & Oil/Gas.
Other trends identified in the research include:
- 60 per cent are seeking at least some degree of shorter lease terms.
- 78 per cent are reporting at least some real estate market softening.
- 56 per cent are reporting that most transactions are on hold as major corporates are continuing to delay making decisions.
Andrew Hallissey continued: “Our emerging data is pointing to the way in which COVID-19 is triggering a workplace transformation,”
“All the signs are that the virus is acting as a catalyst for significant disruption to traditional workplace models around the world, and that the most significant effects are being felt in the office sector.
“It is clear that much decision making in real estate has been on hold as corporates ride out the Covid-19 storm. Therefore, transactional deal volume should rebound as soon as the timing of the vaccine is clear.
“It is also apparent that markets are softening, notably the office market is softening. Depending upon the market the overall vacancy rate will marginally increase, there will be some decline in rents and an increase in secondary subleasing space.
“While over a quarter of corporate clients are anticipating a shift away from high rise buildings and CBDs, 74 per cent of corporates remain committed to them, although we are aware that corporates are generally evaluating options to reduce their existing office footprints and establish secondary out of town hubs.”
The findings of the survey will be featured in a Colliers International EMEA Live Online Event, on Thursday October 22 at 2pm BST, which will examine the impact of the COVID-19 pandemic on EMEA office market fundamentals.
Called ‘EMEA Office Markets Update: The Current State of Play – Opportunities and Risks on the Road Ahead’, it will examine the current outlook for office occupier markets across EMEA, and explore the implications of changing occupier demand and the changes this is likely to bring to occupational strategy as the global economy continues to battle to respond to the effects of COVID-19.
The session will also provide a perspective on activity levels between now and the end of 2020, as well as give a preliminary outlook for real estate in 2021.
To register for the webinar ‘EMEA Office Markets Update: The Current State of Play – Opportunities and Risks on the Road Ahead’, click here.