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Why ‘businesses not buildings’ hold the key to rethinking the office

Derrick Tate Director, Real Estate Advisory, PwC United Kingdom

With much of Europe back in lockdown and under tighter COVID-19 restrictions, debate about the future of the office rages on. 

Some believe the office is dead, with most office workers likely to remain working from home indefinitely. Others believe that as we adapt to COVID-19 and once people are vaccinated we will return to the office exactly as before.

Real Assets Office

Businesses not buildings

Much of the debate focuses on the buildings: do we need a smaller office; do we need an office at all? But you should be focusing on the business and the people not the buildings. It is imperative you understand what your business needs to maintain its culture, to recruit and retain talent, to meet your regulatory requirements and provide services to customers. What space and technology does your workforce need to be motivated, to be healthy and to be productive? Where does your workforce need to be located if not within commuting distance of the office? 

We don’t yet know what permanent changes will result from COVID-19. The most likely scenario is that many former office workers - but not all - will continue to work from home some of the time combined with some time in an office. 

The traditional model of local, regional and central offices is likely to be replaced with a more agile hybrid model in which home or virtual working complement local working in spaces away from the home and time in the central office. The location of work will be reset. Critically time spent in the central office will be for different activities than before.

We don’t yet know what permanent changes will result from COVID-19. The most likely scenario is that many former office workers - but not all - will continue to work from home some of the time combined with some time in an office.

The office is dead, long live the office

Offices will have fewer people undertaking individual concentrated work and more people collaborating and socialising with colleagues, contacts, clients and customers. As central offices will exist to serve a different purpose, the layout, design, furniture and services will need to change. 

Your workforce will choose where to work based on activities. For example, writing a report or reviewing a spreadsheet can be done at home. Collaborative activities, such as workshops, will be more effective in a central office. Some regulated activities may have to be undertaken in a defined controlled space. There will also remain a need for some people to be in the office more, such as those who may feel unable to work from home. In line with this, workforces will be categorised into “personas”, relating to their different space requirements.

The balance of virtual, local and central working for any organization will be dictated by the purpose of the workplace and those personas. 

As you prioritise investment in your real estate portfolio you need to understand its purpose. 

You need to understand the drivers. Real estate after all is typically the second largest area of cost after people, so why do you need it? If you asked this question a year ago most would have answered that we need offices to give employees a place to work. COVID-19 has turned this on its head. Most of us have gone through a forced experiment in home working, and we have learnt some things along the way. 

From our work with clients, we see the purpose of the office is largely dictated by the following considerations, each of which will be different for every organisation:

  • business strategy;
  • size, shape, location and profile of the workforce;
  • workforce needs/preferences 
  • customer requirements; 
  • regulatory environment;
  • technology platform; and
  • organisational culture.

Once you understand why you need real estate, what purpose the space serves, then you can design a technology-enabled, agile hybrid model that meets your needs now and provides the flexibility you may need as we come out of this pandemic prepared to navigate any future disruption. 

2021 offers a unique window of opportunity to rethink the role of the office and reset the foundations of work. Now is a good time to review your real estate leases and services contracts to ensure they are providing what you need and to identify opportunities to release more value. To remain agile, it is likely you will need more of the space you occupy to be held on shorter, more flexible terms, including greater use of short-term flexible space. 

Act now to stay ahead, delays will have a high opportunity cost. If you’d like to find out more, including how to make a case for change, please get in touch. 

The traditional model of local, regional and central offices is likely to be replaced with a more agile hybrid model in which home or virtual working complement local working in spaces away from the home and time in the central office. The location of work will be reset. Critically time spent in the central office will be for different activities than before.

Watch our Real Assets perspectives video: where growth, workforce and real assets meet to find out more.

Contact us

Derrick Tate

Derrick Tate

Director, Real Estate Advisory, PwC United Kingdom

Tel: +44 (0)7718 340363

Craig Hughes

Craig Hughes

Global Real Estate & Hybrid Transformation Leader, Partner, Corporate Finance, PwC United Kingdom

Tel: +44 (0) 7715 607 043

Ainsley Moore

Ainsley Moore

Head of UK Real Estate Advisory, PwC United Kingdom

Tel: +44 (0)7595 611487

Jon Dymond

Jon Dymond

Hybrid Organisations, Workforce Strategy and Culture, PwC United Kingdom

Tel: + 44 (0) 7802 659129

Stephanie Bloor

Stephanie Bloor

Director, Organisational Agility, PwC United Kingdom

Tel: +44 (0)20 7213 5068

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