We asked senior real estate decision-makers in over 100 companies for their views on the challenges they are facing and what will be shaping occupier decision making for 2022 and beyond. We now share our key findings.
- Significant majority of businesses, (68%) expect to be promoting a more regular return to the office by the middle of this year
- 40% of businesses expect to expand their office portfolios
- 70% currently supporting a voluntary return, with only 6% of businesses currently requiring a full-time return to the office
- 72% of companies moving towards hybrid working arrangements
The Hybrid model
Companies must decide how much personal autonomy to allow as well as the balance between office and home. Over half of companies aspire to an equal mix of office and remote-based work - up from 29% last year, while 38% think their workers will be at the office for three or more days per week.”
Regardless of location, a growing number of companies also expect their portfolios to expand. A year ago, a third of companies were expecting to expand physically over the next three years. This has now risen to over 40% overall, with the figure rising to 60% in the technology sector.
Portfolio locations and flex space
Portfolio locations are also coming more into focus, with over a quarter of businesses considering relocating some functions to lower-cost regions or cities. Cost isn’t the only factor at play though, with many businesses looking to relocate to better quality space.
Market changes have also led to increased popularity for the flex office market. The proportion of companies for whom flex space represents less than 10% of their portfolio has halved from 86% now to an expected 41% in two years’ time.
The increase in flex has been driven by a means of entering new markets and preparing for uncertain demand. The desire of occupiers to expand into new markets is also consistent with flex office providers looking to do the same.
Changes to the real estate and workplace strategy
Nearly 90% of those questioned, indicated that they would be making changes to their real estate strategy as a result of the pandemic. Linked to this, the survey also indicated the increasing importance of workplace strategy compared with the same period a year ago. Companies are increasingly looking to increase collaborative areas - up from 36% to 63% and are revisiting design standards (up from 22% to 50%). Enhancing or increasing workplace amenities (up from 9% to 36%) and altering layouts to provide more open space have also increased in popularity. The survey also indicated a heightened desire for an increased emphasis on health and wellness, with 41% of businesses citing this as being important.
Office occupiers face a complex matrix of issues as they adjust to and indeed shape a new reality. After a period of huge uncertainty, there is more clarity emerging over the direction of future real estate strategy, with only a small minority of companies reporting no change in their real estate strategies.
Ten key findings:
1. Repopulating offices is a pressing priority: Plans to bring workers back to the office in greater numbers have not been fulfilled as quickly as organisations had hoped, but the intention is as strong as ever. 68% of companies expect to be promoting a more regular return to the office by mid-year.
2. Employees have a choice – for now: 70% are permitting either a voluntary return to the office at the employees’ discretion or requiring a return on a part-time basis. Only 6% of companies are currently requiring employees to return to the office on a full-time basis.
3. It won’t happen on its own – communication is key, and so is technology: There is a strong recognition that the return-to-office process needs to be pro-actively supported and enabled. Decisive and consistent executive messaging (63%), and targeted communications and strategies (55%) are seen as essentials.
4. Portfolio strategy will be dialled up a notch: Only 8% of companies report no change in their real estate strategy as a result of the Covid pandemic. 63% highlight increased acceptance of the future of remote work as a consequence.
5. Growth plans will push location decisions up the agenda: the size and physical distribution of portfolios is coming more into sharper focus. A growing number of companies (40%) expect expansion in their portfolio footprint over the next three years; and around a fifth are considering relocating some functions, either to lower-cost areas or to better quality space.
6. This is a flex moment: corporate appetite for flex space continues to grow. The proportion of companies for whom flex space represents 11-50% of their portfolio rises from 13% currently to an expected 57% two years hence.
7. Hybrid working isn’t a fad. But it's complicated: A clear majority (72%) of companies say that they are moving towards a “hybrid workplace” model in which employees have a measure of choice within the framework of company guidance. But barely half (56%) have written or are developing a formal policy to guide employee behaviour.
8. The balance between company rules and personal preferences will be tested: 51% of companies aspire to an equal mix of office and remote-based work. Almost as many (43%) favour a position in which employees will be required to come to the office a certain number of days per week.
9. A gear change for workplace strategy: All elements of workplace strategy are seen as more important than they were a year ago. Enhancing or increasing the provision of collaborative areas (63%), and revisiting design standards (50%) are the two main areas of focus.
10. Fluidity rules the roost: Over 60% of companies are looking to raise the provision of mixed, shared or mobile work settings. Nearly 80% will be downscaling dedicated assigned seating.
Download the survey report