The office sector is facing a time of even further evolution.
Environmental, Social and Governance (ESG) has been high on the agenda of investors, developers and occupiers for some years now, requiring modern thinking in design, construction and investment decisions.
The growing trend towards working from home has also been thrown into the spotlight this year with huge immediacy. Many office occupiers are considering whether they have too much space - or perhaps the wrong kind of space - for their future needs.
This is a time of significant challenge - but also opportunity - for those who build and invest in office buildings. The popular view is that offices will continue to be needed, albeit in a more flexible and thoughtful way than before. The office is now about "purpose over visibility".
Rather than a weighting towards banks of desks, more emphasis is being placed on the need for collaboration space, wellbeing and environmental efficiency. This is not a new trend. Zero carbon targets, environmental reporting standards, wellbeing design criteria and, not least, the battle for talent attraction and retention – have been heading in this direction long before the pandemic. But our collective experiences during the pandemic are elevating these factors, much more quickly than would otherwise have been the case.
On the ground, modern "best in class" buildings already have many of the features that occupiers - and their people - are likely to demand from an office offering. Offices with strong ESG performance are more likely to attract and retain tenants, and be attractive to investors and lenders as a result. Likewise, developers and investors with strong ESG credentials - both in terms of their offering and also their internal governance - are likely to attract more capital inflows.
There is however a large proportion of the office market which is not of modern design, either in construction or in fit out. Those buildings face a challenge, but not necessarily an insurmountable one. Building retrofits, modern space design and collaboration with occupiers could make the difference between longevity and obsolescence.
