As a consequence of COVID-19 many are predicting multinational corporates to mix up their real estate portfolios, turning to a more flexible workplaces to help them adapt to this new working model we are embarking upon.
While in the short term the flexible office market has taken a hit, in the medium term, we expect demand to recover, as in times of uncertainty occupiers will be looking for flexibility .
The importance for business to react rapidly to change is increasing as fluctuating demand, financial market instability and radical changes in technology are all impacting business planning.
As the emphasis shifts to more long-term risk reduction, flexible, CAT A + style spaces are becoming increasingly attractive, allowing tenants the benefits in avoiding exposure to long-term risk moving forward.
Many are also reconsidering where their workplaces need to be. Along with people working from home more regularly, one impact of COVID-19 has been a re-think of the commute – it appears many people are now changing their priorities when it comes to where they live.
That may mean that companies reduce their real estate portfolio’s in big CBD hubs, opting instead to invest in smaller satellite offices, allowing staff the ability to live in outer areas and travel occasionally to smaller sites when they need to meet with colleagues or clients.
Additionally as many organisations look to quickly reduce their outputs as we transition through unstable economic conditions, the leasing style of ready to occupy space allows occupation in a few days instead of the 6-12 months that we normally see in the traditional market.
While previously landlords have been resistant to the flexible model, there is a higher expectation for landlord owned and operated “hybrid” models to become a big trend moving forwards. For the bigger corporates that may be looking to shut down their larger headquarter style offices in big CBD hubs, the expectation is that these businesses will not want to transition to a fully flexible style workspace, but instead opt for flexible spaces, that come with the traditional security of a landlord and offered on a medium term lease.
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