Office Real Estate 2021: Era of Hybrid Professional Culture
18.01.2021
Office Real Estate 2021: Era of Hybrid Professional Culture
The business world always listens carefully to key opinion leaders so as not to miss out on the trends they set. Unsurprisingly, Apple’s recent positive feedback on remote working has positively influenced the Work From Home (WFH) trend.
As noted by NAI Global analysts, in interview with The Atlantic Festival, Apple CEO Tim Cook said that he was amazed at the adaptability of the company’s employees to remote working. “Most likely, the company will not return to classic work, because some processes are much better implemented in a virtual format,” Cook added that Apple will continue to pursue this course.
Of course, Apple CEO isn’t the first opinion leader in the corporate world to express a positive view of the opportunities remote working offers.
Numerous technology leaders have shared their positive experiences in implementing remote working protocols. Facebook, Twitter, and Dropbox have announced plans to expand WFH processes for their employees regardless of the pandemic.
Impact on business culture
With so many powerful and influential business leaders supporting remote working, it’s safe to say this new norm will take hold. Remote working will remain along with many other habits that emerged during COVID.
The new protocols will also apply to the commercial real estate industry. This is where the office sector will feel the most impact.
2021: hybrid professional culture
We predict the emergence of the hybrid business model for workspace 2021. We expected that the mix of “office” teams and workers in a remote working format will become a new benchmark for business functioning.
The tenant stock in the office sector will change, but industry specialists should not be afraid of the total decrease in demand. It is important to consider that not all business leaders are happy with remote protocols. For example, the CEOs of Netflix and JPMorgan Chase & Co. negatively characterized remote protocols during the pandemic.
Even some WFH enthusiasts still recognize the important place in modern business that offices with stuff physical presence occupy.
Office space will not lose positions with hybrid business model adaptation. To fully support remote work processes technologically, physical office space must be equipped with a top-end technical arsenal. Trouble-free connectivity, mobile interoperability, and other Smart technologies will be important factors for offices in 2021.
Ukrainian market status
All these trends are relevant for the Ukrainian market as well. According to the NAI Ukraine survey, in 73% of office companies, about half of the staff continues to work fully or partially remotely. But at the same time, 75% of companies have not changed or even increased their office space. The reason is the compliance with quarantine rules and the fact that 50% of companies note the need for more and more common areas (meeting rooms, conference rooms, spaces for informal meetings, administrative premises with equipment, etc.), due to remote work of some workers. Thus, according to the preliminary results of 2020, the vacancy rate at the office market is 13%, contrary to the forecasted 15-18%: in comparison with the end 2019, it increased by 6 pp (from 7%), which cannot be compared with previous office (and not only) crises. So, in 2014, due to the political situation, economic downturn, and simultaneous release of a large volume of a new offer, the vacancy rate increased to 25%. More space freed up in the most expensive and central locations (at submarket the vacancy rate reaches 15-20%), while in more attractive in terms of price/location-balance, central and right bank regions, the vacancy rate somewhile was falling. Although the segment suffered similarly to other sectors, the interest in coworking spaces grew. In successful locations and formats, the losses were compensated by corporate players’ demand: due to coworking spaces they optimized space, accommodated teams, and sometimes were completely located in flexible offices. After all, now is a trend to increase R&D centers. In Ukrainian reality, it is especially important, as R&D and IT consulting amount 30% of IT export. Thus, a wide range of educated IT specialists (80% are English speaking) are ahead of India (the well-known outsourcing giant) at a competitive salary level. With more active remote working, we expect that in Ukraine may increase all or part of research activities. Today in Ukraine are 100+ R&D centers (of which 45% are American).
Maryna Hurevych, Head of the Consulting Department at NAI Ukraine
Source: Liga Business
