This article forms part of our ‘New How: Perspectives’ report: ‘Can real estate help solve the productivity puzzle?’. To access this free report, please click on the download link to the right of this page.
Contrary to popular belief, the Covid pandemic has not destroyed real estate as an investment class; rather it has accelerated the rate at which it was already evolving.
Long leases of ten years or more were already becoming increasingly rare in the office sector and shorter term, more flexible leasing arrangements becoming commonplace, driven largely by changes in the requirements of occupiers. No longer did they need permanent, exclusive space (with an associated fixed large overhead). Staff were already starting to work from home as millennials, with their more rounded perspective on life, filtered through to senior positions in the workforce. Workplaces had to become more than just a place you go to work: employees wanted space to do yoga in their lunch hour, somewhere to put a folding bike and have a shower, somewhere to meet, eat and chat with colleagues.
But how does this relate to productivity? The answer lies in having a happy, healthy, engaged and well-equipped workforce. These changes were not being brought in due to altruism on the part of landowners or employers; they merely worked out that in order to attract talent and maximise productivity, they had to offer more.
The return to work following the pandemic therefore presents an opportunity both for employers and landlords to address the productivity gap and welcome back a happy, healthy and motivated workforce to a working environment that better promotes productivity. But how can the changes that were already taking place be built upon in order to create a more productive workforce? Here are a few suggestions:
- Accessibility – with working from home now a relatively easy option, getting to work needs to be made as easy as possible, starting from the moment someone leaves their front door. If they use public transport, is the workplace near a public transport hub? Many people will now be looking to travel on foot or by bicycle. How easy is it to get into a building and through the building to the place of work? How good are the changing and showering facilities? These may seem like trite considerations, but I have already seen them putting people off going back to the office.
- Working environment – this covers a range of issues, the most fundamental of which is perhaps the quality of the air you breathe, something that has been brought into focus by the pandemic. Studies have shown that too much carbon dioxide in the air leads to a sleepier, less effective worker. Can the air quality/composition in a workplace be measured and controlled so as to provide the optimal composition for the human brain? It appears that it can; an innovative building control/monitoring product, Symbiosy, can do just this. Symbiosy, an app developed by a business unit forming part of the international developer, HB Reavis, uses the data generated by all manner of sensors placed within a building to give tenants and occupiers control over their environment. This can include increasing the airflow in certain areas or rooms, varying humidity levels and changing the temperature and lighting in a space. The app also offers real time consumption data which enables an occupier to maximise the energy efficiency of its space. It can even monitor people’s movement within a space, providing data that can inform how space can be redesigned and used in the most efficient way.
- Wellbeing – occupiers no longer just want desks or a space within which to work. To get the most out of their workforce, occupiers need to be able to offer services or facilities that enhance an employee’s wellbeing. Workout studios, cafes, collaborative space, changing facilities, bicycle parking, counselling support lines – lots of new items are on the agenda, matters which previously would have fallen within someone’s “personal” domain. If the office is to be somewhere that people want to go, these areas will need to be considered and provided for, or the competition will be more attractive.
These measures will not be cheap, and that will be enough to put off many employers and landlords. However, fail to address these issues and you risk being left behind. Valuations of buildings will no doubt start to factor these matters into their mysterious equations at some point in the not too distant future and occupiers looking for space will increasingly demand that premises provide them.
At the start of the pandemic, you might have been forgiven for thinking that people would go back to basics and that all the recent changes in working practices and policies would go out of the window. In fact, the pandemic has only hastened the advance of those changes. Employers and landlords will now need to make sure that they address these issues quickly or risk becoming obsolete. Might we then be able to plug the productivity gap?
To read more of our perspectives on whether real estate can help solve the productivity puzzle, download our free report using the link to the right of this page.