JLL MENA describes the future of the “office” and “WFA” (Working From Anywhere)13 Jan. 2021
Toby Hall, Head of Office and Business Space Leasing – JLL MENA, gives an insight into disruption of the workplace, how it has been fast-tracked by the pandemic and how it impacts employees and companies.
With the discovery of oil in 1966, the late Sheikh Rashid bin Saeed Al Maktoum began the development of Dubai. Leadership and vision allowed the UAE to push ahead with ambitious building and social projects. In the space of just half a century, Dubai exploded in growth, building modern wonders such as the Burj Al Arab and Burj Khalifa, which are now very closely associated with the metropolis.
“The relationship between offices, businesses and people is as real as it has ever been.”
The primary and most significant cost to any business are the people, and they predominantly work in the office. Following this, the second-largest cost is real-estate, which is crucial to the performance, efficiency, and happiness of the main and highest cost to the business – the people.
Working from home was already there but was fast-tracked by the COVID-19 pandemic. A trend that started as a nice novelty but was uncommon to the majority and is not practical in many cases. A lot of factors need to be taken in consideration: space, distractions, the age factor, generation gaps, ease in digital collaboration, distinguishing between home and work and so on.
Merging work and home too close together is not good in the long term. As we are social animals, we crave contact with others for support, well-being and entertainment. And as our lifestyles and work become ever more transient and reliant on digital tools, these simple interactions are under threat.
Human interaction is important for our mental health. Social contact helps us to cope with stress and knowing that others value us is an important psychological factor in helping us to forget the negative aspects of our lives and thinking more positively about our environment. There is compelling evidence to suggest human contact is also vital for our physical health.
While technology greatly assists us to work, they should not replace human interactions. Relationships based purely on electronic communications are doomed to fail.
Dubai is one of the Middle Eastern countries that is back and open for business. Face-to-face meetings are welcome bearing in mind social distancing guidelines are still practiced. COVID-19 cases are relatively low but precautionary measures are put in place everywhere to ensure people are kept safe.
Where is the office? How is it changing from a technical perspective? What does the office look like, and how will we use it? Is there an increased focus on sustainability and wellness?
Commercial real estate markets are undergoing structural shifts, with greater emphasis placed on the role the office plays in attracting and nurturing the best talent. Historically this meant that large international corporates wanted to be in amenity-rich office spaces that offer a variety of F&B options, gyms, sufficient parking spaces and easy access to public transport.
Today occupiers are prioritising the well-being of their staff even further, while also considering the implications to the environment (studies indicate that the built sector is responsible for more than 40% of the world’s Green House Gas emissions). In turn, landlords are finding the need to adapt to these requirements to attract and retain tenants.
The drive for more sustainable buildings is coming squarely from tenants, with a major change of mindset occurring over the past few years. A total of 900 global corporates have signed up to science-based targets (SBT’s) to reduce their carbon emissions in line with the terms of the Paris agreement on climate action. Some corporates have gone even further, announcing plans to become net-zero carbon by 2030. In simple terms, these companies are committing to remove as much carbon as they emit into the atmosphere.
In JLL’s 2019 Investor Survey, only 7% of respondents identified climate change and sustainability as having a major impact on future values, with this figure increasing to almost 70% in our latest survey (conducted in January 2020). This same survey revealed that more than 65% of investors were seeking to act on this trend by increasing their exposure to sustainable assets.
As businesses transition back to physical workplaces, finding ways to respond to the health and safety of the workforce is more important than ever before. The global war for talent has driven corporates to increasingly consider the human experience and staff well-being as major factors in their selection of office space. The global WELL Building Standard launched back in 2014, is the first global rating system focused exclusively on the ways that buildings can improve our comfort, drive better choices, and generally enhance health and wellness.
While the uptake of the WELL building standard in the Middle East has been limited to date, this number is expected to increase rapidly in future years as owners seek to establish a means of demonstrating the competitive advantage of their projects to more health-conscious occupiers.
Two interrelated trends have combined to shape and define the demand for office space at the global and regional level in recent years - the increased demand for flexible offices, and the growth in remote working and working from home (WFH). While both these trends predate COVID-19, the global pandemic has exacerbated their influence and impact on how office spaces are reimagined for years to come.
Flex space will take a different form than it has in the past but will continue to grow as corporates and investors respond to the increasing demand for flexibility brought on by COVID-19. To meet the growing demand, there has been a rapid increase in the total supply of flexible office space in the Emirate. Although the effort is gaining momentum, the level of flex space in Dubai remains below the EMEA average of 2.3%, so there is room for further growth.
In August, JLL undertook structured conversations with more than 20 major corporates in Dubai, and the response was that most companies see flex space as part of their overall portfolio mix going forward.
The future is private: COVID19 is resulting in a global shift away from shared co-working facilities to more private and enclosed spaces. This trend is also apparent with the majority of centres offering only enclosed offices or a hybrid mix of enclosed offices and co-working space. Centres that were originally targeting the co-working sector are now seeking to remodel their space to offer more enclosed offices.
Diversified locations: Another trend is for conventional and flexible office facilities to be accommodated in non-office buildings. JLL is working in the UAE with retail, hotel, and industrial landlords to repurpose their spaces to allow office use – a new trend. This enables former 100% retail or industrial developments to benefit from an additional office use which drives footfall and vibrancy to developments and provides office users with a different type of property to consider rather than just office towers. This is currently taking place at City Walk and is picking up some great momentum.
The increase in remote working may result in slightly less demand for office space in the future, the reduction in densities due to new social distancing measures will increase the amount of space required to house a given level of office staff. The long-term impact of COVID19 on office demand is far more nuanced than many are suggesting, with a broad range of factors impacting demand.
Companies might decentralise to out of town locations or operate a satellite or hub and spoke model. This has been tried before and was a trend after the 9/11 tragedy when people were nervous about going to dense cities to work. After a time, companies decided that the centralised office was the best and people seemed comfortable to go back. Sub-urban locations are cheaper, so watch this space for some companies to make a jump.
So, what is the future of the office? Will we be working from home, a flex office space, or a conventional office?
Commercial real estate will be driven by a greater emphasis on improving collaboration, productivity and employee well-being. Most companies will relocate or will look to modify the design and layout of commercial real estate spaces to address mid-term company strategies and employee needs. In the long-term, demand will centre on commercial real estate space that offers more of a collaborative and social experience rather than just a place to work. There will also likely be widespread adoption of Health & Wellness Standards to ensure employee well-being.
Seeing and hearing that the office will remain the primary focus for corporate strategy and corporate real estate strategy. But it will be complemented by an increased remote set-up, and a flexible satellite set-up in some cases. Different companies will do different things. However, if too extreme from the norm, this may severely affect talent attraction and retention.
From a recent survey office workers who are operating from home during the pandemic, 70-80% would like to continue to do so; 50% want to work from home one or two days a week, 30% would like to do three or four days, and 17% want to work remotely every day.
Establishing remote working networks for the long term can be challenging. Working remotely during a pandemic is vastly different from remotely working when things are normalised. Remote working makes it harder to reinforce company culture, to build teams, foster innovation, and to offer professional development.
Technology doesn’t solve everything. It is very difficult to expand your network within an organisation or across organisations. And if you are a new employee, it is very difficult to get onboard. It will be less about the sector, and more about the type of tasks undertaken. Offices will continue to play a role in bringing people together to facilitate collaboration. In the media, digital, and financial jobs, for example, there will be real benefits from being in an office. In contrast, those in relatively routine jobs, where the communication around them is information sharing rather than idea creation, might be a different story.
The jury is out. It seems that working full-time in an office will be a choice, not an obligation, as companies compete for talent. Offices will foster collaboration, provide opportunities for people to come together to work creatively, to innovate, to cement bonds, and to provide mentorship and professional development.
In reality, in-office work and remote work are complementary, and neither can completely replace the other. The post-pandemic workplace will involve a hybrid combination of three distinct office environments: the corporate office, flexible co-working facilities and remote working. The challenge for occupiers will be to establish the right mix and balance between the different settings and working patterns.
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JLL MENA describes the future of the “office” and “WFA” (Working From Anywhere)
Toby Hall, Head of Office and Business Space Leasing – JLL MENA, gives an insight into disruption of the workplace,....
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