COVID-19 and the Impact on Demand of Office Space
COVID-19 has rapidly affected our routine life, businesses, disrupted the world trade and movements. It slows down the global economy. The severity on the economic activity caused by COVID-19 resulted in increasing unemployment and a contraction in the number of employed persons. The impacts of the pandemic will shows in the change of demand for office space as employees and employers embrace virtual working. It will be clear that the demand for and supply of office properties will definitely fell in the first half of this year. Another impact of COVID-19 could be that companies split operations between several locations, potentially benefiting smaller centres.
The Market has described the MCO as the worst economic downturn since the 1930’s depressed economy and foresees a recession at least as bad as or worse than the 2007-2008 global financial crisis. The MCO took a significant toll on businesses. Demand fell, and the daily functioning of countless firms was disrupted. That’s why unlocking the country are a reason for cheer. As more parts of the commercial field begin to open, economic activity will pick up and our lifestyle may back to normal. The lockdown has demonstrated that workers can still carry on their amount of work that usually takes place in offices when the office is closed. As workplaces start to reopen with physical distancing measures in place, offices in the centre of major cities are the most problematic, often necessitating commutes on crowded public transit. Out town locations where workers typically drive will be able to resume something approaching normal operations much more quickly.
However, one should understand that the new normal will not be like any same as before. Business will need to adapt this new normal in which everyone practices social distancing, everyone on the street wears masks all the time, and people are particular about hygiene. Companies will now be well aware that they could make do with less office space. But they may also have realized that they also need better, more resilient office space.
The past four months have proven that employees can work just as efficiently from home as they can from an office. Some have discovered that they can be more productive at home, and enjoy the freedom of a more relaxed schedule. Inevitably there will be a reduction in occupier demand. Businesses will realise they don’t need to pay sky-high rent for office space when their employees can work just as efficiently from home. But if COVID-19 has accelerated the trend for home working, it has also revealed its limitations which is in a knowledge economy, an organization’s success will still depend on face-to-face interaction, collaboration and serendipity. With universal flexible working, the office could become a vital anchor.
Companies have been squeezing more and more people onto floorplates for a long time. However, the pandemic is pushing the organizations in the opposite direction which they will need more space per employee. To better solve the spread of viruses, ratios will have to take up with shifts, also the starting and closing hours or working remotely, for offices to reopen safely and maintain physical distancing. It’s too early to say whether we will ever again feel comfortable occupying space in such close proximity to others, which makes the longer-term impact on office requirements very hard to gauge.
If offices become destinations to meet co-workers, get inspiration and exchange ideas, rather than just to sit at a desk, those in buzzy locations make more sense. If organizations don’t need as much space because people work remotely more often, they may choose not to cut their rent bill but to spend the same amount on a smaller, more characterful building in an amenity-rich central location, a much more attractive destination for employees than a featureless office park.