It’s been a rollercoaster of ifs, whens and maybes for business owners trying to make the decision on the future of their office real estate. From the sweeping liberation of the early pandemic with employer declarations of permanent remote work, to vaccine and return to work mandates, it appears the needle has finally settled, albeit waveringly, on a hybrid office future.
Back at the start of this year, around half of all professionals were expecting their employers to allow them hybrid office working arrangements according to Forbes’ commentary of LinkedIn’s Workforce Confidence Index and that figure was even higher for the tech and finance industries, at 73% and 67% respectively. Employees seem to have called this perfectly and employers have softened their remote-first stance as many corporations have alluded to the need for in-person collaboration in their businesses - at least part-time anyway.
Which Big Players are doing an About-Turn?
The majority of big tech companies and others who were initially very vocal and adamant in their views that offices were a thing of the past are now equally as vocal that it’s actually a hybrid type work environment that’s required. In the past week alone, Google’s CEO Sundar Pichai talked about their new hybrid work policy going into next year, where three days per week will be spent in the office, emphasizing that flexibility is key and they would also be allowing four weeks per year to be spent working from anywhere. Financial giant Amex also announced very similar plans this week to allow employees to choose how they want to work with four weeks ‘work anywhere’ offered across the year.
Large companies are finally and gradually embracing the changes brought about by the pandemic and recognize that a flexible approach could be the main factor in attracting and retaining talent. Hubble HQ created a useful working list of global players that are devising hybrid and flexible working arrangements and will continue to do so as things slowly return to ‘normal’.
What Does Hybrid Mean for Commercial Property Investment?
Early-pandemic business owners that were in the market for office property side-shelved these plans completely and those with existing property have either kept them ticking over or looked for leasing opportunities to generate incremental income. At the point at which we all resigned ourselves to the fact that COVID was here to stay, conversations started happening around “Should we downsize and just have a hub office somewhere” and “do we even need a dedicated office space now that this is the new normal?” - valid questions indeed. Working from home has been overwhelmingly more productive than anyone thought it would be and it would be tempting to keep it that way for many businesses who maybe just need a space to meet once in a while. In the course of doing their research however, the most savvy business owners recognize that it can often be more expensive to lease data center space along with a ‘hub’ or co-work office than to have a single office location which serves multiple purposes.
Working capital may also have been a bigger concern for businesses in recent times as they tried to preserve liquidity for the next ‘wave’ or lockdown, reluctant to spend or commit on their own buildings. Inaction could have been appropriate before but the big guys are gearing up for a return to office and business owners and founders need to make decisions around where and what their space should look like or be left trailing behind. Over the next few years, tech workers will be entering Canada at a rapid pace and given the housing affordability crisis in the GTA, not everyone can or wants to use their home as an office and employers need to be flexible enough to cater for varying needs.
Asking the Right Questions
For business owners wondering if they even need an office space, mindset needs to change quickly as we transition into a hybrid model between now and early 2022. Those who forfeit a dedicated office space for a server room must consider the implications and impact on their long-term business goals; does it put them at a disadvantage not having a collaborative workspace? And how do they attract and retain employees looking not only for some level of flexibility, but who are in the driving seat and looking for new benefits that might assist them personally; onsite childcare, gyms, shopping opportunities, clinics and counselling services are all creative ways to care for employees in an office setting. Even if remote work outweighs any of that for your team and you can afford the extensive costs of server co-location, the major question still to be answered is whether you want to take advantage of all the other benefits of property ownership?
Reach out to PCG with any questions on your real estate investment and sign-up for our mailing list to be the first to receive notifications as we receive off-market deals..