Office-based employment is expected to drop across the Nordic region in the short term, resulting in higher vacancy and dampened leasing activity. Indeed, historical data for Copenhagen are showing an almost perfect negative correlation between the growth of office-based employment and office vacancy. But the outcome doesn’t necessarily have to be decisively negative. The shift we envisaged towards a more fluid workplace anchored by a high quality headquarter space and supported by a network of smaller locations might become a reality more quickly than anticipated pre-COVID.
“The uncertainty of the last few weeks has indeed given a new relevance to workplace agility. The long-run future of work; mobility, tech enablement, employee choice, has been pulled into the short-run present by COVID-19. Companies and employees are gaining the experience with large-scale home-based working. Technology has proven a useful tool to sustain collaboration. Long-term technology will complement, but not replace the need for the physical workplace. The physical workplace will be a choice, rather than a default, for both firms and their employees. The outcome will likely be a rationalised physical footprint, made up of different types of space to support employee needs”, says Dragana Marina, Head of Research at CBRE Denmark.
COVID-19 outbreak is expected to have a brutal short-term effect on Nordic economies, while mid-term outlook remains optimistic. Governmental fiscal stimulus will be essential to ensure the economy can bounce back quickly. Although e.g. Denmark has become one of the first countries in Europe to begin lifting some lockdown measures, the reopening of the economy will be gradual. Office-based employment in major Danish cities, a key driver of office demand, is expected to see slower growth. The same trend could possibly be seen across the region.
“Changing landscapes have spurred the need for agile real estate strategies. This is creating real implications for workplaces, assets and overall portfolios. For all stakeholders, infusing agility into their real estate will help them embrace change, allowing for a certain level of uncertainty while supporting the evolving needs of organisations and the employees they serve.
Flexibility of use is expected to be one of the most important occupier trends going forward. As occupiers build flexibility into corporate real estate strategy and the growth of flexible space transforms office market, landlords and investors of all types will re-evaluate their strategies”, concludes Dragana Marina.