2021: A Space Odyssey

The pandemic has had a profound effect on many real estate sectors, including offices – and our workplaces will never be the same again. Employers are continuing in their efforts to bring us back to the traditional workplace, but why are they having to try so hard? And what can we expect instead of the good old desks we’re used to?

In June 2020, three months after the outbreak of Covid in the US, Mark Zuckerberg revealed that over the next 5–10 years up to half of Facebook’s staff could be working remotely. For the office sector, this is not an auspicious sign. Microsoft also stuck its oar in, when it announced that it would allow its employees to work from home, not only during the pandemic but also afterwards. If this trend catches on, such an approach could result in a massive weakening of the office sector, if not its total demise. However, at the moment there’s no reason to panic, since it’s clear that the sector has got through what we hope was the worst of the pandemic and the strictest of the lockdowns without losing its main tenants.

Under the same banner

Everyone has been complaining about how working from home is bad for business, but it’s true that many companies have actually benefited from this situation. Some corporations it seems (especially in the shared services sector), have actually recorded an improvement in work efficiency, with less time wasted on commuting and the distractions of office gossip. However, problems have cropped up elsewhere: employees have started feeling rather less attached to the companies they work for. According to a survey last year by Cushman & Wakefield, only 50 pct of those working from home agreed that they were “part of their company and its culture”. Relations with colleagues have also been diminished. “If you can’t look after your company’s culture, it will just fall apart and then your employees will just be a bunch of freelancers, with nothing really in common,” laments Aleksander Szybilski, the head of workplace strategy at Cushman & Wakefield in Poland. The result of this has been the recent high levels of employee rotation, which is something no business wants to see.

How to draw employees back

Companies can see the risks in this, and so they are doing everything for their workers to come back to the office, at least on a hybrid-work basis. The current general consensus is that the office is the best place to develop a sense of team spirit and encourage people to identify with their firm. “Tenants can see that building a team and a culture through a computer screen just doesn’t work,” insists Magdalena Karniewska, an asset manager at Globalworth Poland. So it seems that for employers a return to the office is essential.

This is where the problems begin, because the idea that employees are itching to get back to the office to chat over their morning coffee once again could just be wishful thinking. According to one survey recently published by newspaper Rzeczpospolita, six out of ten Poles now want to work from home either wholly or part-time. Those longing to get back to the office make up only 25 pct of the total. And to make this picture worse, even this might not entirely give us the true extent of their reluctance to return, since what someone asserts isn’t always what they genuinely feel. Aleksander Szybilski points out that according to the findings of an internal Cushman & Wakefield report, those employees who had previously claimed that they wanted to come back to the office, hadn’t even bothered to do so once a couple of weeks had elapsed since the easing of the restrictions. “This is probably akin to making a new year’s resolution to work-out regularly at the gym – people say one thing but do another,” he suggests. The results of a further study indicate that employees would be more willing to come into the office if they hadn’t been so empty since the lockdowns were imposed. “You need a certain critical mass, a certain number of people without whom coming into the office won’t seem so attractive again,” adds Aleksander Szybilski.

Staff call the shots

A decade ago employers didn’t have any difficulty coaxing their employees into the office when they thought this was good for their business. But we now find ourselves in a different world. At the beginning of the Covid crisis, employers could fool themselves into thinking that the employers’ market would return and that they would once again be able to dictate the terms. “That turned out to be completely untrue. I would even say quite the opposite: what we are seeing is the strengthening of the hand of the employee. Workers have a lot more say than they once did,” stresses Aleksander Szybilski. He even goes so far as to argue against bringing work back from the home to the office too quickly. “If we make the changes gradually and engage people in a discussion about how to come back, we can avoid generating employee dissatisfaction and other unfortunate consequences for the firm. Such a diktat without consulting the staff could result in people leaving. Holding onto personnel is already tricky – and if we force them to change their habits from one day to the next, it is certain to be disastrous for the company,” he warns.

If, indeed, employees are to have the deciding word on how they work, then we can officially welcome in the era of hybrid work. It is already here and is going nowhere. The only thing left to decide is how many days they spend in the office and how many working at home. This also means that companies will need much less space than they have up until now. “Just four or five years ago, offices were being designed under the assumption that for every ten people, you needed nine desks – or in other words, enough for 90 pct of the workforce. In some sectors, especially the more flexible ones such as IT and service centres, there would be desks for 80 pct of the staff. Nowadays we are talking about 65–70 pct,” explains Arkadiusz Rudzki, the executive vice-president for sales and leasing at Skanska Commercial Development Europe.

Helping with the HR

However, this doesn’t necessarily mean that offices are going to require less space. “If there are any space savings to be made, they will only be slight and within the range of about 10– 30 pct, depending on the starting model,” claims Aleksander Szybilski. In general, companies are not going to drastically reduce their space requirements, as this could turn into an HR disaster. “Players on the office market envisaged a scenario where companies were going to be put under a lot of pressure by Covid to reduce costs. Office space under such circumstances could have been the first thing in the firing line for making savings; but in the end, such a scenario didn’t play out. Most tenants are, in fact, not looking to reduce the size of their leases,” explains Piotr Capiga, the deputy the head of occupier services in Warsaw at Cushman & Wakefield.

The trend that actually emerged is somewhat different: even before the pandemic, companies were using their offices as an HR tool in the battle to recruit and hold onto their employees. This very same tool might now be used to entice existing personnel to return to their former way of working. Increasingly, hotel lounges, coworking areas and serviced offices are acting as a source of inspiration for how to rearrange office space to make it more attractive. “What makes flex space stand out is its embrace of the hospitality ethos, which among other things means that users should get something they don’t have at home. If there was nothing exceptional, people wouldn’t even bother coming into coworking centres. This kind of space is alive. People know that they can work in the common areas in what is a unique atmosphere, where all kinds of different events are held. Now we are trying to tap into the energy of flexible space and transfer it into traditional offices,” explains Arkadiusz Rudzki. The kind of space created in this way is much more vibrant and encourages a lot more interaction between the people using it, but it also gives them much more freedom. “There are many more places where ad hoc meetings can take place, and also many tenants will be setting up their own canteens or cafés within their own space just to give their people something unique,” points out Arkadiusz Rudzki.

Rather curious space

This kind of office model includes quiet working rooms, but not in the form of those kiosks that people spend 15 minutes inside while making a phone call. Rooms are being created where people can take part in long teleconferences in comfort. “The office space also includes micro-offices and, in addition to that, there are rooms for brainstorming, team-building, innovative thinking and informal meetings – and in all of this the hotel-isation of office space is evident,” claims Katarzyna Zawodna-Bijoch, the CEO of Skanska Commercial Development CEE.

The space has to be designed to be universal so that it can be used in many different ways. “Some tenants want to turn their offices into after-hours relaxation zones. These need to have well-equipped kitchens and good sound systems, so that the office can used as a social centre. The crucial thing is that the office space can be put to other uses,” insists Arkadiusz Rudzki.

Technology is also playing a crucial role in this. Being able to enter an office with a smartphone without the need to touch anything is no longer just a creature comfort but a question of safety. Phones can also be used to locate colleagues, change the temperature or lighting and reserve offices and conference rooms. “These days technology has become an integral part of how we think about creating new office space and is playing a key role in hybrid work. Rooms have to be equipped with the tech needed to allow people to develop their personal relationships – even if at a distance,” points out Katarzyna Zawodna-Bijoch.

Just as with coworking space, office space is becoming far more varied and inspirational. It is being designed to stimulate the imagination and encourage people to work together. “That’s why we’re seeing additional forms of stimulation appearing in this space, such as webinars, TED talks, meetings with inspirational speakers as well as all kinds of diverse events. This all requires a rather different set-up than just a kitchen and some common space,” argues Skanska’s CEO. Arranging such space also requires a different kind of management that goes beyond just maintaining the building and occasionally sorting out tenants’ problems. “We’re moving from facility management to community management. As developers, we are beginning to manage the creation of social networks,” claims Katarzyna Zawodna-Bijoch.

Indeed, the measures being taken by real estate owners and managers have taken on a crucial role in what is in fact the employer’s branding strategy. “Being well aware of our responsibilities as an owner and manager, we try to meet our tenants’ expectations by building up a broad community in Globalworth’s offices. This is why we have committed ourselves to a wide range of initiatives this year, such as organising a summer cinema, concerts, picnics, gardening workshops and guided walks,” reveals Magdalena Karniewska of Globalworth.

According to Piotr Capiga, there can be little doubt that investment is returning to improving offices. “This is almost certainly due to the fact that for many the cost of leasing an office has held steady for many years, but when we look at salaries over the last ten years, we can see that there’s been a lot of growth. Wages are accounting for a growing proportion of the costs of firms, whereas office rental costs are comparatively low,” he points out. For many companies, it’s now cheaper to invest in attractive offices and new technology than to get embroiled in a salary bidding war, particularly when the former kind of investment pays off much more quickly.

Revolution on hold

However, for Magdalena Karniewska it’s still much too early to be speaking of an office revolution. “We are not collecting any data on this, but from what we can see only a small number of our tenants have decided to make serious changes to their office layouts as a result of the pandemic. Most have just settled for making their offices comply with the sanitary requirements,” she points out. Marta Zawadzka, the leasing director of Yareal Polska, agrees: “Even though companies are not taking measures to rearrange their space and are maintaining social distancing by allowing staff to work from home, they are nevertheless investing heavily in office hygiene, which includes providing masks and disinfecting shared facilities,” she points out.

You could say that the view that there’s been no obvious revolution has already been partially proven true, since many workers have already returned to the office. “People started returning en masse in June and continued to do so in July and August. In Warsaw, for example, some buildings have seen levels of 70–90 pct when it comes to returnees,” claims Magdalena Karniewska. Marta Zawadzka has also seen something similar. “The highest tenant activity was in our Lixa building in Warsaw. Nonetheless, many companies have decided to shift towards a hybrid work system, where workers spend a day or two working from home,” she says. However, in sectors where many people worked from home even before the pandemic, such as in IT and shared service centres, there are many fewer signs of a general return to the office.

Now is the time for change

According to Katarzyna Zawodna-Bijoch, we are now reaching the point where the next stage of the evolution of the office is about to take off. “More and more tenants are thinking about their office space in a different way than before and, as a result, such space is becoming objectively better. Offices are of an increasingly better standard and far more varied – places where people can spend their time in different ways. Those standards that were the best but were nonetheless rarely applied, such as employee well-being, sustainable development or safety, are now becoming the accepted norm. The office is going to be the central hub for exchanging information, coming up with ideas and maintaining an organisation’s culture,” she predicts. Arkadiusz Rudzki also believes that the number of companies that are aware of the direction they need to be going in is growing. “Work is still needed to put these trailblazing ideas into practice after the pandemic,” he insists.

Aleksander Szybilski of Cushman & Wakefield also points out that the implementation of these new models is currently only in its initial stages and this process is going to take many years. The offices that are being created today will have to be tried out to see how effective they are and how well they meet the demands of the market. After all, any new venture is fraught with risk. “Nobody really knows how to plan an office at the moment. But right now, we are seeing the emergence of pilot programmes and companies continuing to venture into untested waters,” he claims. Many companies have decided that their employees should return by the end of the year, while others have put this moment off to the beginning of 2022. “I believe that new concepts are going to be tested out throughout all of 2022. Time is going to be needed to assess such factors as how the solutions that are currently being dreamt up will affect the retention of personnel. It will only be by 2023 that we will have models that are tried and tested,” predicts Aleksander Szybilski.