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Is it curtains for the office?

July 1, 2020

The novel coronavirus has already changed the way we think about work. What implications might this have for the office and and the way cities work in the future?

Pärchen mit Laptops
Image: picture-alliance/ Bildagentur-online/Tetra-Images

"Office centricity is over," Shopify founder and CEO Tobi Lütke tweeted recently.

Meanwhile, Google boss Sundar Pichai plans to give employees a $1,000 (€900) grant for office equipment and furniture to be used when working at home.

Read moreOpinion: Let's not return to business as usual after coronavirus

Some believe we are on the brink of big changes. "Since the ‘death of distance' was predicted in 1997, big cities have thrived as never before," Paul Cheshire, professor of economic geography at the London School of Economics, says, adding that now they will need to adjust to survive.

In 2018, a US Census Bureau survey found that only 5.3% of Americans worked from home full-time. Rich McBee, chief executive of remote network performance specialists Riverbed, believes that somewhere between 15%-20% of the workforce that had previously been working in a workplace would not be coming back to it after the pandemic.

US-Filmverband kürt Spielberg-Drama «The Post» zum Film des Jahres
Only 5.3% of Americans worked from home full-time in 2018Image: picture-alliance/courtesy Everett Collection

What goes up...

Global Workplace Analytics estimates employers could save an average of $11,000 per half-time telecommuter per year, primarily due to increased productivity, lower real estate costs, reduced absenteeism and turnover and better disaster preparedness. "We will definitely see those companies who historically have been resistant to home-working in some cases reducing property costs," says Mat Oakley, head of the UK and European commercial property research team at real estate firm Savills.

Remote workers may also be willing to work for less. LogMeIn surveyed 2,200 workers in April and found that 62% of Americans said they would take a pay cut to work from home.

"These spaces could become more agile, collaborative work areas programmed for different teams to use," says Guenaelle Watson, managing director of office consultants 360 Workplace.

An ongoing research project on remote working by the University of Montreal's School of Industrial Relations showed that while workloads had increased because of telework, staff productivity had risen.

Cycling in Times of Coronavirus

Must come down

One major issue is that city centers may well start to empty, office projects stand idle and new projects are put on hold. In the UK case, this is also compounded by Brexit.

Meanwhile, as companies provide more employees with remote work computers and access to email on personal mobile devices, the need for heightened cybersecurity will become mandatory.

Studies so far on the likely environmental costs appear mixed, with higher domestic use of electricity, greater use of the car possibly balanced out by lower transport use and lower energy use in offices.

Not having a place to go to work also places pressures at home and the overlaying of domestic and work responsibilities. "These are shouldered unequally and it is women who are bearing the brunt of this.  I think the soaring of domestic violence figures during the lockdown is a real warning," Les Back, a professor of sociology at Goldsmiths College in London, says.

Meanwhile, the majority of the workforce still work in factories or warehouses or in health care, public transportation or the service sector and have never been given the option to work remotely, during the crisis or before. "It has changed the shape of our cities already. It is the poorly paid workers who are often black and brown who are traveling on buses and risk contact while the white middle classes studiously avoid urban encounters. I think cities like will become even more phobic and divided as a result," Back adds.

Mass transit, vital for the functioning of the largest, most productive cities, will face a financial crisis especially in the short term. "There is a need for bigger public subsidies; business travel, airports, convention centers and hotels are likely to decline even in the long term," Cheshire says.

Symbolbild - Homeoffice mit Familie
Workloads have increased because of telework, but staff productivity has risenImage: Imago Images/fStop Images/Antenna

For whom the office bell tolls

"I think we are at a tipping point. There's a reorientation, a recalibration of the relationship between place and time and social life that we're on the cusp of," Back says. "We may see profound changes and some things may not come back," he adds. "It seems that domestic house sales are booming for now in the UK. There's a massive new opportunity for interior designers and architects, not just for the design of office spaces, but for the design of entire communities, neighborhoods and cities."

"I'd expect there to be fewer large offices towers in the construction pipeline in 2021 as investors and developers struggle to secure the vital prelets for large spaces that act as the green light for investment go-ahead," Rebecca Larkin, senior economist at the Construction Products Association, says. As for bigger cities, there is the question of how unused office space could be re-used. Back suggests turning offices into residential spaces.

Larkins adds that indirectly there is an impact on city center retail. Supermarkets have switched their expansion strategies to the higher-margin central convenience-type stores, even including discount chains such as Lidl and Aldi, but with fewer commuters picking up groceries on the way home, will they revert back to out-of-town instead as well as develop their online offerings, she asks. "But a mass exodus to the countryside appears unlikely," Larkin adds.

"If we do switch to a home working approach, there's clear implications for telecommunications and the rollout of fiber broadband, even more so if conurbations spread out wider and wider to more rural locations," Larkin says. "Increased e-commerce will accelerate the structural change already occurring in retail, diverting operations away from bricks and mortar stores on the high street, to industrial warehouses operations for storage, distribution and logistics for online sales,” she adds.

Sonnenuntergang London
A JLL survey found that 58% of office workers missed the officeImage: picture-alliance/dpa/D. Lipinski

Not so fast

But the rise in home working does not spell the end of the office, others argue. "History, and our latest office worker survey, shows that the office is not going away anytime soon," JLL's Global CEO, Corporate Solutions, Neil Murray, says. "The physical office will maintain its importance for facilitating innovation and collaboration and, ultimately, employee health, well-being and productivity," he said. A JLL survey found that 58% of office workers missed the office, with younger cohorts showing an even stronger desire to return. A survey by Gensler found only 12% of workers want to work from home full-time and 70% say they want to spend most of their week in the office. "There is now ample evidence that spatial concentrations of office jobs increase the productivity of office workers all else taken into consideration. This is not just true laterally, but new evidence suggests vertically. Workers in taller buildings are more productive," says Cheshire.

Read more: Coronavirus: More Japanese to swap urban life for the countryside

"In the short term, social distancing means that we actually need more space per person in offices. And in the long term, there will still be a demand for office and meeting space as there are some interactions that are better in person. This may provide opportunities for flexible office and meeting space providers at the expense of long-lease commercial real estate," professor Noble Francis, economics director at the CPA in London, says.

Technology, media and telecoms firms, today the main sources of demand for office space, have seen demand for their products and services boom during the pandemic and could continue to expand.

In fact, some of the offices that survive may not just get more spacious but more luxurious, as more of the routine work is done remotely," Cheshire believes. "Low quality, less accessible offices will decay or be remodeled or redeveloped for housing, but high quality offices built to provide better ventilation and hygiene will grow."

Head shot of a man (Jo Harper) with grey hair and brown eyes
Jo Harper Journalist and author specializing in Poland