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The office: Is this the end of the Central Business District?

Companies are asking themselves whether they really need to have everybody in the office all the time. What does this mean for cities? James Wilmore reports

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Pringle believes co-working spaces are in trouble. Photo: iStock
Pringle believes co-working spaces are in trouble. Photo: iStock

City-based office workers face an uncertain new world. Commuting on a packed train - if walking or cycling is not feasible - to then spend hours in close proximity with colleagues is a daunting prospect.

 

Even getting in the office lift poses a problem.

 

“Nobody has turned the lifts on because nobody wants to get in them,” says former RIBA president Jack Pringle, principal at Perkins & Will, of the firm’s London office. “Everybody’s taking the stairs.”

 

In essence, the long-running debate around the future of the office has been supercharged by the coronavirus crisis. Is this really a turning point in the history of the office?

 

"The notion of putting 7,000 people in a building may be a thing of the past" Jes Staley, Barclays

 

A direction of travel is emerging with businesses having vacated a reported one million square feet of prime office space in London since lockdown. A surprising 13% of London businesses said they will ditch a permanent office and allow working from home as standard, according to a London Chamber of Commerce poll.

 

Department store chain John Lewis has revealed it will give up one of its London head office buildings - which housed 450 staff - as it rethinks space to offer more flexible working. Action for Hearing, a charity, has said it will no longer retain a large London office and allow staff to work from home “for the foreseeable” future.

 

Banks have also made some eye-opening statements. Barclays’ boss, Jes Staley, says, “The notion of putting 7,000 people in a building may be a thing of the past”. Credit Suisse Group AG has said it will give up 9 floors of office space. UBS Group told Bloomberg that one-third of staff could work remotely.

 

Morgan Stanley’s boss James Gorman has said it will have "much less real estate” in future. “We’ve proven we can operate with no footprint,” he said in a Bloomberg TV interview.

“More and more people will find out that talent is not really attracted to Central Business Districts” Josip Kardun, Meyer Bergman

 

In general companies have coped better than expected during the enforced home-working revolution.

 

“It isn’t as bad as everyone thought,” says Pringle. “For those with a comfortable house and a certain type of work, it can be quite productive. One of our clients said their finance team is much more productive working from home rather than the office, where they get distracted.”

 

A survey of clients by workplace design consultancy, Burtt-Jones & Brewer, found managers did not expect such a seamless changeover. “It’s been a genuine surprise to senior management teams,” says co-founder Adam Burtt-Jones. “They are not firefighting as much as they thought they needed to.”

 

As video conferencing has become the norm, some firms have even dreamt up a way of initiating the serendipitous conversations that happen in an office. At one company, around half a dozen staff are selected on a random basis for a “virtual chance encounter” to encourage “random collaboration”, according to the Burtt-Jones & Brewer report. Colleagues are also getting to knowing each other better by meeting their family and pets, virtually at least, the report notes.

 

But not everyone is convinced by the wonders of Zoom. Josip Kardun, chief investment officer at global property investment firm, Meyer Bergman, says, “You can’t do everything through Zoom, you need a creative atmosphere. I have colleagues who have said they have had weeks of their kids jumping on them and want to go back to the office.”

 

“It’s been a genuine surprise to senior management teams,” says Adam Burtt-Jones. “They are not firefighting as much as they thought they needed to”

 

For younger staff too, with less living space, the lockdown has been difficult. As Pringle says: “If you’re a relatively new graduate, working from a rented bedroom with a laptop you probably thought you’d signed up for life in an office where you’d mix your work life and social life. Being stuck in a bedroom all day is not fun.”

 

Nevertheless, the experience of being able to operate remotely will give businesses “pause for thought”, says Pringle. “People will ask themselves - ‘do we really have to have everybody in the office all the time’?”

 

While social distancing remains in place, research by Colliers International has found around 60% of the country’s 11.8 million office desks will initially be unusable. As a result, nearly eight million people will have to continue to work from home. Less people does not necessarily mean less space required, factoring in social distancing. It will depend on what proportion of your workforce you have in the office.

 

As Kardun argues: “If you have 30% of your people working from home the remainder will take more space due to the hygienic precautions so they will occupy the same amount of space as previously.”

 

Commercial property giant Landsec said this month it is seeing “early signs of growing occupancy” as firms return to work.

 

Pringle has heard three distinct stories from clients. There are bosses eager to get staff back to the office and return to business as usual. But Pringle has told them: “You won’t want to occupy the same density as you did before. And really small meeting rooms will not be popular.”

 

“Nobody has turned the lifts on because nobody wants to get in them.” Jack Pringle, Perkins & Will

 

Burtt-Jones has heard similar, with between 10% and 20% of its clients surveyed indicating they are keen to get back.

 

“It’s for a variety of reasons,” says Burtt-Jones. “Some miss the interaction, so want to go to a different place to work and some feel a strong emotional value to being in the office.”

 

Another set of Pringle’s clients have found that working from home is working reasonably well, which means they will have a rota of people working around half their time at home. “This means they’d be coming into the office to get to know people and be inspired and have the kind of human interaction that doesn’t work on Zoom,” says Pringle.

 

A third option, that Pringle has been asked to look at, is the hub and spoke idea, which has long been trumpeted as the future. Essentially it means a company retains a city-centre ‘hub’ office, but also has ‘spoke’ offices in regional locations allowing staff to work from these, thereby reducing their commute. “It’s been talked about for decades, but if it worked, I can see the attraction,” says Pringle.

 

This option could prove popular for companies that have a critical mass of people living in a particular location, away from the head office. Long commutes could become a thing of the past.

 

Shift patterns may also change. As Pringle says: “If you think about the rush hour model, it’s nuts. I can’t imagine many people will want to travel at rush hour again.”

 

Kardun also believes that central business districts (CBDs) will become less important across Europe. “The advantage of areas like Canary Wharf will not be that dramatic anymore because the industries are changing. More and more people will find out that talent is not really attracted to those CBD areas.”

 

This could be the death of the open-plan office... and no one wants to be a small meeting room

 

The biggest challenge appears to be for companies offering co-working spaces. “The co-working sector will be heavily impacted by what is happening,” says Kardun. “It’s like going to a beach on holiday. You won’t want to go to a beach where people from all round the world are. Guys like WeWork have a big, big problem.”

 

If demand for office space is lower, what does this mean for cities? Pringle predicts that residential could feature more heavily in city centres. “You could see some office buildings repurposed to residential in whole or part,” he says. Kardun agrees that more mixed-used buildings are inevitable in future.

 

For traditional companies, Burtt-Jones believes retaining a head office will become less important, while others will invest in making their space standout. “The idea that the office is the place where you do work and is the symbolic centre of the organisation… there is the potential for that to start to disappear,” he says. “But for some it will still be important, as it can be a differentiator from competitors.” He talks of a “very brand-focused” environment for companies that “illustrates their values”.

 

Some firms are thinking about reintroducing a tea trolley service instead of a staff kitchen

 

But even if firms eventually decide they need less space, a quick decision is unlikely to be forthcoming where lease get-out clauses will be prohibitively expensive. As a result, current workspace will have to be redesigned. Burtt-Jones believes it is likely to be the death of the traditional open plan office, or it will have to be heavily adapted.

 

Other more prosaic factors will include dealing with staff gathering in the kitchen. This has led some firms, according to the Burtt-Jones research, to thinking about reintroducing a tea trolley service.

 

But most companies responding to the research said they were not going to rush back to the office and would rather “learn from others’ experience than be pioneers”.

 

At this still early stage, it seems that experimentation will be the way forward for the majority of companies - before any big decisions. As Burtt-Jones says: “We are at the start of the wave, rather than the middle or the end.”

 

Kardun offers: “People will experiment and then maybe the pendulum will swing back, but it will have an impact.”

 

“It’s taken 20 years for the penny to drop on agile working at any sort of scale,” says Pringle. “I think this is a point of inflection where people will go, ‘Holy cow, for us there’s a better way of doing this.’”

 


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